Is the lustre returning to Pearl?

Following the appointment of Mr Douglas Surmon as its Chief Operating Officer in April, Pearl Healthcare (ASX:PHL) has commenced an aggressive strategy to return the dental laboratory group to profitability by rationalizing expenses and winning back and keeping customers.

"There has been much said about Pearl since its float but the one thing that really impressed me from the day I started is the solid technical expertise and competence of the staff in all of our nine labs," Mr Surmon said. "We have a great team of people and we now have a core of full service labs in Sydney, Brisbane, Newcastle, Canberra, Adelaide, Perth and three in Melbourne so we have a solid base to move forward with and grow organically.

"We have core expertise in chrome and implants in particular, plus orthodontics. We also have Nobel Biocare Procera and 3M ESPE Lava scanning facilities in every state as a basis for high quality, aesthetic ceramics. All our products and services are of a high and consistent quality."

Mr Surmon, who previously managed Race Dental Laboratory for 8 years, said that underpinning the push for profitability within the individual laboratories has been a streamlining of the head office team which supports the administrative needs of the network of labs.

"Fiscally, as a publicly listed company, we wear our hearts on our sleeves because we must regularly report our numbers to the ASX," Mr Surmon said. "We just reported an annual loss for the 2007/08 year of $1.1M, which was down from the previous year's loss of $1.4M. Whilst this overall improvement was not significant, if you look at the numbers carefully, the second half of the year saw us turn a corner.

"A number of our laboratories that have been operating profitably with appropriate margins were consistent throughout the reporting year. A number of other laboratories including our largest one located in South Australia recorded increased sales and profitability in the second half of the year. Some of our operations including Buckley Hutton and Canberra experienced losses in the first half but were profitable in the second half of the year. These improvements were the result of planning and changes that have been implemented over the past 6 months.

"A merger of our two facilities in Sydney also resulted in reduced overhead costs with minimal impact on sales which again led to improvements in the second half of the financial year. It is hoped that the closure of one loss-making laboratory in Victoria will also leave the group with a solid base to increase future sales and build a viable and sustainable operation.

"We are now concentrating on growing the existing laboratory base and I expect to see the next financial year having a difficult first quarter while improving throughout the period to result in an overall profitable position by the end of the next financial year.

"Operationally, we are relaunching the image of Pearl as an Australian company providing a reliable, premium service to dentists with all products made in Australia. We want to be seen as a reliable partner in the supply chain and as a group, we have the ability to offer dentists the benefits of a wealth of experience and resources that is unmatched in the Australian market."