Allied Healthcare Net Falls on Manufactur... ( ST. LOUIS May 12 /- Allied Health...)

Allied Healthcare Net Falls on Manufacturing Delays

Date:5/12/2008

ST. LOUIS, May 12 /PRNewswire-FirstCall/ -- Allied Healthcare Products, Inc. (Nasdaq: AHPI) reported today that its net income for the third quarter ending March 31 fell 64 percent, from about $278,000 last year, or 4 cents per share, to about $100,000 in the current quarter, or 1 cent per share.

Sales for the third quarter increased by about $240,000 compared to the third quarter of the prior year. However, higher material and labor costs this fiscal year eroded margins and profits for the quarter.

For the first three quarters of the 2008 fiscal year ending March 31, Allied net income fell about 75 percent, from about $772,000 last year, or 10 cents per share, to about $193,000, or 2 cents per share this year.

Customer orders for the first three quarters of fiscal 2008 remained essentially flat compared to the previous period. However, actual sales declined by about $784,000, or about 1.8 percent, primarily because manufacturing delays slowed Allied shipments of some customer orders.

Allied's manufacturing problems led to eroded profit margins and reduced net income. Higher material and labor costs also pressured margins and net income. Allied was able to achieve a modest price increase of 0.8 percent. But that price relief could not offset the combined effects of manufacturing delays and higher costs.

Planned cost reduction efforts began to show positive effects in the last quarter, said Earl Refsland, Allied president and chief executive officer. The company will lower costs by bringing production of some products in house, he said. New investment in equipment is planned to help resolve the manufacturing throughput problem and reduce the cost of machined components.

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