5th May 2016 10:36
LONDON (Alliance News) - Medical devices maker Smith & Nephew PLC on Thursday said revenue grew in the first quarter year-on-year, driven by a strong performance in developed markets and partially offset by weakness in China and the Gulf region.
Total revenue for the quarter to April 2 was USD1.14 billion, compared to USD1.10 billion for the comparable period a year earlier. Revenue from the US, the group's largest regional business, grew 10% in the quarter, while growth from other established markets came in flat year-on-year, dragged back by currency weakness.
Emerging markets revenue, however, declined 12% in the quarter, with positive trading in most countries entirely offset by tough conditions in China and the Middle East. Smith & Nephew said its Trauma, Sports Medicine and Advanced Wound Management businesses all suffered in China in the first quarter, in line with the second half of 2015.
Smith & Nephew said end-market demand in China has remained healthy, and it expects growth to return in the second half as it laps weaker comparatives.
But the group has seen a slowdown in tendering activity and sales in oil-dependent economies in the Middle East in the quarter, which has particularly hit its Trauma business, which makes products to help repair broken bones along with plates and screws for limb fractures.
Smith & Nephew maintained expectations for the full year, anticipating good underlying revenue growth driven by investments made in its existing businesses, acquisitions and new technology launches.
On a divisional basis, Sports Medicine Joint Repair continued to perform well, with revenue up 11% on recent product launches and a strong contribution from ArthoCare, the soft tissue repair firm Smith & Nephew bought in 2014.
Arthroscopic Enabling Technologies, which makes hip positioning systems for hip arthroscopy procedures, saw revenue grow 4.0%, driven by good demand for the Coblation product portfolio, while revenue for its Other Surgical Businesses division grew 19%, helped by a strong performance for its Ear, Nose & Throat franchise. Smith & Nephew added the integration of Blue Belt Technologies, which provides orthopaedic robotics-assisted surgery tools, was going to plan.
Within the wider surgery business, Trauma was the only unit to see revenue decline, down 7.0% on the problems faced in China and the Middle East which offset growth in the US.
Smith & Nephew said revenue grew in its Reconstruction business, up 9.0% for Knee Implants on high demand for its Journey II Total Knee System, while Hip Implants sales rose 4.0%.
Revenue for Advanced Wound Care was flat in the quarter, mainly due to the hit from the soft Chinese market, while revenue at Advanced Wound Bioactives declined 4.0%, bruised by reimbursement headwinds for the Oasis extracellular matrix product and volatile stocking patterns for Santyl, an ointment for dermal ulcers and severely burned areas.
Sales for Smith & Nephew's Advanced Wound Devices unit grew 11%, again helped by a strong performance for its Pico disposable negative pressure wound therapy. The group added the pilot for its Renasys Touch wound therapy product in Europe went well and a full launch is due later in 2016.
The FTSE 100 stock was down 3.1% at 1,128.00 pence Thursday.
By Sam Unsted; [email protected]; @SamUAtAlliance
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