3rd May 2018 14:31
LONDON (Alliance News) - Shares in Smith & Nephew PLC sank to bottom of the FTSE 100 on Thursday after the medical devices maker cut its full year revenue guidance in Olivier Bohuon's final act as chief executive.
Smith & Nephew were down 5.7% at 1,320.0 pence in afternoon trade. Shares had rallied 7.8% in the run up to the results since the beginning of April.
Last month, Smith & Nephew appointed former Alere Inc boss Namal Nawana as its new chief executive officer from May 7, to replace Bohuon who said in October he planned to retire by the end of 2018. Bohuon has headed the company since 2011.
Smith & Nephew has lowered its full-year underlying revenue guidance as it delivered a "mixed performance" in the first quarter of the year.
For the quarter to the end of March, revenue rose 5% to USD1.20 billion, from USD1.14 billion, though this was flat on an underlying basis.
There was one fewer trading day than the comparable period last year, which impacts its surgical businesses more than the Advanced Wound Management and Established Markets more than the Emerging Markets, Smith & Nephew noted.
The company said its full-year guidance has been hit by the "weaker" first quarter, with underlying revenue growth now expected to be in the range 2% to 3% with a trading profit margin "at or above" that achieved in 2017.
"The question remains whether Smith & Nephew can improve revenues here enough," said Accendo Markets analyst Artjom Hatsaturjants. "After all, cutting guidance so early in the year implies quite a disappointment".
The company in February had guided underlying revenue growth of between 3% to 4% for 2018, with a 30 to 70 basis point improvement in its trading profit margin on last year. Trading profit margin for 2017 stood at 22%.
First quarter revenue in the company's Advanced Wound Bioactives division was down 12% due to weak sales of its core Santyl burns ointment product.
Sports Medicine Joint Repair continued to perform well, with revenue up 6% on recent product launches and integration of Rotation Medical and its Regeneten Bioinductive Implant for rotator cuff repair.
Arthroscopic Enabling Technologies, which makes hip positioning systems for hip arthroscopy procedures, saw revenue fall 5% as "softness in resection seen in previous quarters continued".
Revenue for Advanced Wound Care was flat in the quarter, with a strong performance in the US offset by weakness in some European countries.
Smith & Nephew's Advanced Wound Devices unit posted 2% revenue growth due to strong demand for its wound therapy device PICO.
"We expect sales growth to be stronger in the second half than the first half of the year. The phasing of the trading profit margin is expected to track this, albeit with margin lower in the first half of 2018 than that achieved in the same period last year," the company added.
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