7th Feb 2019 08:14
LONDON (Alliance News) - Medical device maker Smith & Nephew PLC on Thursday posted a reduction in annual profit due to increased expenses from its restructuring effort.
Smith & Nephew makes, among other things, products for treating wounds and joint replacement systems. Pretax profit for 2018 was USD781 million, 11% less than USD879 million in profit in 2017.
The company undertook its Accelerating Performance & Execution restructuring programme, beginning at the end of 2017, which incurred USD120 million of costs in 2018. This compares to around USD60 million of benefit from the effort realised in the course of the year.
Selling, general, and administrative expenses rose to USD2.50 billion in 2018 from USD2.36 billion in 2017, while research and development expenses increased to USD246 million from USD223 million.
Revenue for the year was USD4.90 billion, up from USD4.77 billion the year before. This matches the company-compiled consensus of USD4.91 billion.
Underlying revenue growth was 2% in 2018. Smith & Nephew's guidance was for underlying revenue growth in the lower half of the 2% to 3% range. Consensus was for underlying revenue growth of 1.9%.
Trading profit was USD1.12 billion, up from USD1.05 billion the year before. Consensus was for a USD1.10 billion in trading profit. Trading profit excludes a number of factors such as impairments and integration costs.
Adjusted earnings per share totalled 100.9 US cents, compared to a 95 cent analyst consensus forecast and 94.5 cents adjusted earnings per share result in 2017.
Smith & Nephew declared a final dividend of 22.0 cents per share, bringing the total for 2018 to 36.00 cents, up 2.9% from 35.00 cents per share for 2017.
For 2019, Smith & Nephew is guiding for underlying revenue growth in the 2.5% to 3.5% range. On a reported basis, this will be equivalent to 1.8% to 2.8% of revenue growth at February 1 exchange rates and including Smith & Nephew's acquisition of Ceterix Orthopaedics in January.
"We accelerated performance across 2018, with 3% underlying revenue growth in both the third and fourth quarters and a 7% uplift in full year trading profit. We start 2019 with a strengthened organisation and a new growth-oriented operating model," said Smith & Nephew Chief Executive Namal Nawana.
The stock was up 2.6% early Thursday at 1,500.00 pence.
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