Stock Market News
Smith & Nephew replaces guidance after weak quarter for hips
Smith & Nephew replaced its full year revenue guidance after a weak first quarter for hip replacements and wound-care, especially in the US and other emerging markets.
The FTSE 100 group, which will wave goodbye to chief executive Olivier Bohuon next week, reported quarterly turnover of $1.2bn that was flat compared to the same period a year ago on an underlying basis but boosted 5% by currency swings.
This weak start, down from the 2% underlying growth in the final quarter of last year and 3% for the year as a whole, saw the company trim its full year expectations for revenue growth in the range of 2-3% with a trading profit margin "at or above" the levels of 22.0% achieved in 2017. The mid point of 2.5% is 3% below the consensus forecast after Bohuon had two months previously said 2018 should see underlying revenue up 3-4% and profit margins improving.
Bohuon, who is to be replaced by former Johnson & Johnson man Namal Nawana on 7 May, acknowledged it was a "mixed performance" as the effects of some softer markets and a slowdown in the Advanced Wound Bioactives business made flat overall by a quarter of 9% underlying and 15% reported growth from emerging markets.
He said the new guidance assumed procedure volumes return to more normal levels for the rest the year, with sales growth expected to be stronger in the second half than the first. Trading profit margins are expected to improve likewise, albeit with margin lower in the first half of 2018 than in the same period last year.
"We expect trading conditions to return to more normal levels, which, combined with the continued rollout of new products and our sustained emerging markets performance, gives us confidence in delivering an improving performance trend during the remainder of the year," he said.
US sales of $545m were down 2% year-on-year, while other established markets, namely Europe, Canada, Japan, Australian and New Zealand, also contributed a 2% underlying decline and 9% growth at the reported level.
By product area, knee reconstruction implants were up 2% underlying, while hips were down 2%. Wound care was down 2%, and sports medicine and trauma up 1% as sports joint repair grew 6% helped by the acquisition of Rotation Medical.
SN shares fell 7% on Thursday to 1,300p.
Organic growth of -0.1% was 110 basis points below Goldman Sachs' forecast, with advanced surgical devices growth 80bps short and wound management 190bp. "The softness in the quarter was broad-based, with only sports medicine and advanced wound care meeting and/or exceeding our expectations."
The new guidance implies 3% downside to the consensus, Goldman said, with new reported revenue guidance of 5-6% well short of the 7.4% consensus, while trading profit margin compares to consensus of 22.4%.
"Net-net, we calculate that the revised guidance implies a 2-4% downside to consensus adjusted profit."
The FTSE 100 group, which will wave goodbye to chief executive Olivier Bohuon next week, reported quarterly turnover of $1.2bn that was flat compared to the same period a year ago on an underlying basis but boosted 5% by currency swings.
This weak start, down from the 2% underlying growth in the final quarter of last year and 3% for the year as a whole, saw the company trim its full year expectations for revenue growth in the range of 2-3% with a trading profit margin "at or above" the levels of 22.0% achieved in 2017. The mid point of 2.5% is 3% below the consensus forecast after Bohuon had two months previously said 2018 should see underlying revenue up 3-4% and profit margins improving.
Bohuon, who is to be replaced by former Johnson & Johnson man Namal Nawana on 7 May, acknowledged it was a "mixed performance" as the effects of some softer markets and a slowdown in the Advanced Wound Bioactives business made flat overall by a quarter of 9% underlying and 15% reported growth from emerging markets.
He said the new guidance assumed procedure volumes return to more normal levels for the rest the year, with sales growth expected to be stronger in the second half than the first. Trading profit margins are expected to improve likewise, albeit with margin lower in the first half of 2018 than in the same period last year.
"We expect trading conditions to return to more normal levels, which, combined with the continued rollout of new products and our sustained emerging markets performance, gives us confidence in delivering an improving performance trend during the remainder of the year," he said.
US sales of $545m were down 2% year-on-year, while other established markets, namely Europe, Canada, Japan, Australian and New Zealand, also contributed a 2% underlying decline and 9% growth at the reported level.
By product area, knee reconstruction implants were up 2% underlying, while hips were down 2%. Wound care was down 2%, and sports medicine and trauma up 1% as sports joint repair grew 6% helped by the acquisition of Rotation Medical.
SN shares fell 7% on Thursday to 1,300p.
Organic growth of -0.1% was 110 basis points below Goldman Sachs' forecast, with advanced surgical devices growth 80bps short and wound management 190bp. "The softness in the quarter was broad-based, with only sports medicine and advanced wound care meeting and/or exceeding our expectations."
The new guidance implies 3% downside to the consensus, Goldman said, with new reported revenue guidance of 5-6% well short of the 7.4% consensus, while trading profit margin compares to consensus of 22.4%.
"Net-net, we calculate that the revised guidance implies a 2-4% downside to consensus adjusted profit."
Related share prices |
---|
Smith & Nephew (SN.) share price |
Stock News headlines are gathered from financial news sources around the web. Views and opinions on each item are from their respective authors and website. They are not opinions of LiveCharts.co.uk
Get a free widget for your website with our latest headlines.
You can now add our live prices and new headlines to your website.The news widget features quotes for Oil prices, spot Gold price and Indices plus a choice of news channel for healines.
Top Shares pages
- Share price quotes
- Share charts
- Share watch list
- Company Results Calendar
- Top Large UK Shares
- UK Market Sectors
- Stock market news
- Company news
- Share tips
- A-Z company search
More share features
POPULAR Share Prices
- Royal Mail share price
- Lloyds share price
- HSBC share price
- Barclays share price
- Prudential share price
- Santander share price
- NEXT share price
- Diageo share price
- BP share price
- Vodafone share price
- British Airways
- Centrica share price
- Tesco share price
- Taylor Wimpey Share Price
- National Grid
- GKP Share Price
- Marks and Spencer
- Rolls Royce
- Rio Tinto
- THG Share Price
- Aviva Share Price
- Boil Share price
- Easyjet Share Price
- Genedrive Share Price
- SSE Share Price
- IAG Share Price
- Boohoo share price
- HE1 share price
- AVCT share price
- BOOM share price