skip to content

Annual Results

Smith & Nephew boosts FY pretax profit

09 February 2017 07:25

Smith & Nephew has almost doubled its FY pretax profit to $1.06bn, from a year-earlier profit of $559m, as it kept a leash on expenses and benefited from the sale of its Gynaecology business.

"Whilst we still delivered growth in 2016 it was not at the level we had wanted," said CEO Olivier Bohuon in a statement. The company's FY dividend distribution was almost half that in 2016.

"However, I was pleased with our 2016 performance in areas such as Sports Medicine and Knee Implants, where we maintained strong momentum."

Bohuon added that market conditions in China and the Gulf States together shaved more than a percentage point of growth off the group in 2016.

"China returned to growth in the second half, as did the Emerging Markets as a whole," the CEO added, commenting that he was confident Smith & Nephew now had the right structure and capability in place.

"Beyond this, with our innovative products and deep customer relationships, we are well set to deliver a stronger performance generating higher revenue growth and a better trading profit margin in the future."

The improved FY pretax profit was achieved on a minor rise in revenue to $4.67bn, from $4.63bn, along with lower expenses and a $326m profit on the disposal of its Gynaecology business in August last year.

A final dividend of 18.5 cents per share (37.0 cents per ADS) was recommended. This, together with an interim dividend of 12.3 cents (24.6 cents per ADS), would give a FY distribution of 30.8 cents, from 61.6 cents.

OUTLOOK

"We expect the dynamics in our markets to be similar in 2017 to those seen in 2016," said Bohuon.

"Against this backdrop, the Group expects to deliver higher revenue growth and an improved trading profit margin in 2017."

Smith & Nephew's reported revenue growth was a combination of underlying revenue growth, the impact of acquisitions and disposals and foreign exchange.

"We expect 2017 reported revenue growth to be up year-on-year, in the range of 1.2%-2.2% at prevailing exchange rates, with underlying revenue growth in the 3%-4% range," the CEO said.

"Underlying growth is expected to reflect not only the dissipation of the headwinds we faced in China and the Gulf States but also, most importantly, our improving execution."

In 2017, based on exchange rates prevailing at the end of January, Smith & Nephew expected the forex headwind to be around one percentage point and the disposal of the Gynaecology business to be an 80bps headwind.

"We expect Trading profit margin to improve by 20-70bps in 2017. Within this, as previously indicated, Blue Belt Technologies will remain dilutive as we invest behind the roll-out of new products. The divestment of the Gynaecology business is a 10bps headwind to 2017 Trading profit margin.

"We now have the right structure and capability in place and are focused on improving our execution across the Group, with a clear set of actions underway.

"Beyond this, with our innovative products and deep customer relationships, we are well set to deliver a stronger performance generating higher revenue growth and a better trading profit margin in the future." Story provided by StockMarketWire.com

Related Company: SN.

Info Point:

To buy or sell shares call our Dealing Room on 0113 243 6941.

Too much jargon? Our glossary will help make sense of things.

Find out more about our Share Dealing Services.

Client Area Access

» Secure Login

» Not registered yet?

Bluezest Aviva Aberdeen

Branch Finder

Redmayne-Bentley have High Street branches throughout the UK. Find your nearest branch.