Equipment supplier drops low-end devices as it reverses declining growth

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US medical equipment manufacturer, Arjo, has sold its low-spec medical beds group – Acare – to a Chinese company as part of its strategy to increase profitability.

Arjo acquired Acare in 2012 to expand is stake in the medical beds market but it has now decided to concentrate on the premium segment for medical beds where the profitability is “significantly better”, according to the company.

Arjo expects the sale of its Acare arm to boost operating profit for the group by around £2m from 2019.

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The move comes as Arjo claims to have reversed five years of declining growth, having just delivered growth for the third consecutive quarter, with net sales increasing 10%.

President and CEO of Arjo, Joacim Lindoff, said the divestment of Acare is part of its action plan to improve the group’s gross margin in the medical beds category.

“Our strength is found outside the value segment and that is also the area on which we will focus to maintain and further strengthen our leading positions in the market.”

CBL Group has its head office situated in Guangzhou, China, and has about 1,200 employees.

The divestment encompasses a production and sales unit in Zhuhai, China, that has 186 employees and generated sales of about £7m in 2017. The divestment is expected to be completed at the end of 2018.

Speaking about the period between July and September 2018, Lindoff said: “After five years of declining growth, we have turned the business around and we now deliver growth for the third consecutive quarter.

“With a consistently strong order intake for the quarter and a continued positive outlook for the remainder of the year, we are now raising our forecast and expect organic net sales growth to be in the middle of the 2% to 4% interval for the full year.”

Image: Getty

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Joe Peskett

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