Axis recovers from a 'poor' flu season despite profit slump

He said the kits were expected to have a "significant" impact on sales and profits.

His upbeat outlook came despite pre-tax profits falling 43 per cent to 4.3 million in the six months to 30 June following a "poor" flu season for the company, during which fewer of its testing kits were needed.

The City had already priced in the bad flu season, which had been highlighted in a pre-close update in June.

Finance director Ronny Hermansen said that, using the underlying profit measure - which stripped out the revaluing of contracts last year, to take into account foreign exchange rate hedges - earnings fell from 3.6m to 2.4m.

Gilham added that the company had committed itself earlier in the year to pump a further 2m into sales, marketing and product development, eating into profits. Interim sales edged up from 50.6m to 50.9m.

The chief executive stressed that only about 30 per cent of the flu-testing business - worth around 16m - is seasonal, with the remainder coming from repeat orders that go ahead irrespective of quiet flu seasons.

The flu product is also expected to be rolled out into other countries, growing the market for the kit, which is already used in Germany, Norway and Switzerland, Gilham said.

He added that a patent application filed yesterday for a simplified and more efficient vitamin D test would take Axis-Shield into an "exciting" market in the years ahead.

Seymour Pierce analyst Mike Mitchell said: "Market conditions have been challenging and, at this point in the year it's too early to predict the strength of the (coming] winter flu season, but commercial penetration of core products continues."