3rd Nov 2016 14:28
LONDON (Alliance News) - Medical devices maker Smith & Nephew PLC on Thursday reiterated its guidance for 2016 as it said revenue rose by 1% in the third quarter of 2016, helped by a good performance in the US and a return to growth in China.
Smith & Nephew reported consolidated revenue of USD1.12 billion for its quarter to October 1st, up 1% from the quarter to September 26, 2015. On an underlying basis, which adjusts for acquisitions, disposals and movements in exchange rates, revenue rose by 2%.
This takes Smith & Nephew's revenue for the first nine months to October 1st to USD3.45 billion, up from USD3.38 billion in the comparative period of the previous year.
The company said that the sale of its Gynaecology business in August reduced its reported revenue growth rate by around 1%.
On an underlying basis, it saw 2% revenue growth in the US in the quarter to USD540 million from USD532 million and 6% growth in emerging markets, but this was offset by a flat performance in its other established markets.
By franchise, Smith & Nephew saw 8% revenue growth in its Sports Medicine Joint Repair segment to USD140 million from USD130 million, and 2% underlying growth in its Arthroscopic Enabling Technologies. Its Trauma & Extremities segment returned to growth, up 1% in the quarter due to an expected improvement in China.
Overall, its Sports Medicine, Trauma & Other segment was up 2% to USD457 million from USD447 million.
Smith & Nephew said its full rotator cuff repair portfolio drove strong demand, and said it had also made good progress with the launches of its new Lens Surgical Imaging System, and Werewolf Coblation System, seeing positive customer engagement across both.
Reconstruction revenue rose 35 to USD351 million from USD342 million, as its knee implants franchise continued to perform consistently well, whilst hip implants revenue growth was flat, in line with recent quarters.
Advanced Wound Management revenue fell 2%. Weakness in China and Europe offset a strong performance in the US in Advanced Wound Care.
In its Advanced Wound Bioactives franchise, revenue fell 3%, hit by reimbursement headwinds and pricing pressure, additionally, its Regranex product for the treatment of diabetic foot ulcers saw growth below usual levels due to wholesaler stocking patterns. Smith & Nephew said it now expects flat revenue for the Advanced Wound Bioactives segment in 2016.
Smith & Nephew said that, as it had stated in July at its interim results, it expects positive trends in its Reconstruction and Sports Medicines, as well as an improvement in China, to continue. However, it expects this to be somewhat offset by the Gulf States and the Advanced Wound Bioactives segment.
As it has previously guided, Smith & Nephew expects its second half trading profit margin to exceed what it delivered in the first half, as usual, although this will be held back by "negative operational gearing reflecting sales growth levels".
During the quarter, Smith & Nephew reached an agreement on a US tax issue, and now expects a one-off benefit from a tax provision release, and as such its tax rate for its 2016 results will now be around 24.5%.
"The third quarter saw a continuation of many of the trends seen in the previous period. Underlying revenue was up 2%, led by strong global growth of 8% in Sports Medicine Joint Repair and 4% in Knee Implants. We drove revenue up 6% in the Emerging Markets, with China returning to growth," said Chief Executive Officer Olivier Bohuon in a statement.
"We are greatly encouraged by the positive customer reaction to recent product launches, such as new camera and COBLATION systems in Sports Medicine and the extension of our JOURNEY II Total Knee System. The expansion of our NAVIO robotics platform is progressing at pace and it promises to be another successful acquisition," Bohuon added.
Shares in Smith & Nephew were down 1.1% at 1,141.00 pence Thursday.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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