Axon R&D push eats up profits

An accelerated research program helped Aussie export Axon Instruments (ASX:AXN) drive sales up 25 per cent last year, but also contributed to a significant profit slump.

Axon, which has released two new products onto the global market in the past month alone, revealed a revenue jump to $US35.7 million compared with $US28.5 in 2000.

But the Melbourne company's after-tax profit dipped 75 per cent to $US750,000, down from $US3 million in the corresponding period.

In a shareholder update released to the Australian Stock Exchange, Axon blamed the profit fall on a 78 per cent increase in fully-expensed research and development costs for the year totalling $US12.3 million.

"Axon consciously undertook the additional research and development recognising that a short-term impact on profits was necessary to build future profits and growth," the statement said.

"The benefits can be expected as the new products phase-in during the course of 2002 and beyond."

The statement said other contributors to the lower profit take for the year included the company's move to larger premises and reduced sales on the back of a softening of the genomics market in the latter half of the year.

Axon's US-based chief executive officer and founder, Alan Finkel, was unable to be contacted for comment today.

The company's preliminary final report also showed Axon's cash position sitting at $US35.1 million, compared with $US33.4 million in the previous year.

"This cash reserve provides Axon with the resources to buy or license complimentary technology as it becomes available, so as to maintain Axon's competitive lead," the statement said.

It also said that its product development schedule continued to run on time, with two products about to be released to the market and another two either in customer testing or close to this stage.

These included the GenePix professional and personal microarray scanners, the ImageXpress high-throughput fluorescence scanner and the PatchXpress second-generation ion channel screening system, which is earmarked for completion early next year.