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Investing.com -- Ambu A/S (CSE:AMBUb) shares plunged more than 13% on Wednesday after quarterly earnings came in below market expectations, with higher tariffs and currency pressures reducing profitability despite double-digit organic revenue growth.
The Danish medical device maker reported a 13.1% organic revenue increase for fiscal 2024-25, driven by continued adoption of single-use endoscopy devices, though reported Q4 growth slowed to 5.7% as the U.S. dollar weakened against the Danish krone. Full-year revenue rose to DKK 6,037 million from DKK 5,391 million a year earlier.
UBS said Q4 group revenue missed consensus by about 3%, while adjusted EBIT fell 23% short, primarily due to tariff costs.
The adjusted EBIT margin for the quarter was 10.0%, below the consensus estimate of 12.6%. Endoscopy revenues of DKK 889 million missed expectations by 4%, with organic growth of 12%, while Urology, ENT and GI revenues came in 6% below forecasts, growing 16%.
Respiratory revenues were 2% below consensus with 9% organic growth, and Anesthesia was in line, growing 6%.
The company in a statement said the company delivered “another year of continued, persistent single-use endoscopy conversion,” citing 13.1% total growth and 15.4% endoscopy growth.
Endoscopy Solutions led Ambu’s performance, followed by 11.4% in Respiratory, 19.6% in Urology, ENT and GI, and 9.9% in Anesthesia and Patient Monitoring.
The EBIT margin before special items rose to 13% from 12% last year. Ambu said the margin was “positively impacted by operating leverage, offset by commercial investment to fuel future growth and negatively impacted by short-term effects from FX and tariffs.”
Without external effects exceeding DKK 50 million, the company said the margin would have reached 13.4%.
Gross margin improved to 60.2% from 59.4%, supported by production efficiencies, pricing governance, and a higher contribution from Endoscopy Solutions.
Operating expenses accounted for 47.2% of revenue, slightly down from 47.4%, though Q4 included more than DKK 20 million in tariff-related costs.
Free cash flow totaled DKK 407 million for the year, including DKK 130 million in Q4. Capital expenditure represented 8% of quarterly revenue, in line with Ambu’s long-term target of investing 6% to 10% of revenue.
Ambu proposed a total cash distribution of DKK 260 million, equal to a 43% payout ratio. This includes a DKK 110 million dividend, or DKK 0.41 per share, and a DKK 150 million share buyback program to begin after the annual general meeting on Dec. 3, 2025.
For fiscal 2025-26, Ambu projected organic revenue growth between 10% and 13% and an EBIT margin before special items of 12% to 14%.
The outlook includes a 2-percentage-point margin headwind from tariffs, UBS said. Endoscopy Solutions is expected to grow about 15%, with mid-single-digit growth in Anesthesia and Patient Monitoring.
Ambu plans to expand its North American manufacturing to reduce tariff exposure and meet rising demand, aiming for all regional endoscopy demand to be produced locally by 2029-30.
Under its “Zoom Ahead” strategy, the company targets long-term organic revenue growth of 11% to 13%, an EBIT margin above 20%, and cash conversion of 40% by 2029-30.