2nd May 2019 09:20
LONDON (Alliance News) - Smith & Nephew PLC on Thursday updated its guidance as underlying revenue growth was ahead for all three of its franchises in the first quarter of the year.
Shares in Smith & Nephew were up 3.3% at 1,523.50 pence in morning trade.
On a reported basis, the medical device maker's revenue was flat at USD1.20 billion for the three months to March 31 but revenue was up 4.4% on an underlying basis.
Reported revenue suffered a 3.9% foreign exchange headwind in the quarter, while underlying revenue is adjusted for exchange rates, as well as for acquisitions and disposals.
All three of the company's global franchises - Orthopaedics; Sports Medicine & Ear, Nose & Throat; and Advanced Wound Management - reported underlying revenue growth for the period.
However, while two of the divisions also posted a slight increase in reported revenue, Advanced Wound Management suffered a 4.6% currency headwind. This resulted in a marginal slip in reported revenue to USD288 million from USD290 million despite underlying growth of 4.1%.
Given the recent underlying performance, the medical device maker has updated its guidance and is now "increasingly confident" that its underlying revenue growth for 2019 will be in the upper half of its 2.5% to 3.5% guidance range.
Smith & Nephew expects its reported revenue growth rate to be in the 2.9% to 3.9% range, including an expected loss of 40 basis points from foreign exchange and acquisitions.
The company's expected trading profit margin is still expected to be in the range of 22.8% to 23.2%. The tax rate on trading results for 2019 is likely to be in the 19% to 21% range.
Reported revenue from established markets, including the US, was down at USD983 million from USD991 million, while emerging markets was up at USD219 million from USD205 million.
Smith & Nephew Chief Executive Namal Nawana said: "It's been a good start to 2019 across the whole of Smith & Nephew.
"All three global franchises delivered improved organic growth as we continued to improve execution; important confirmation that each has the potential to perform sustainably at or above their markets.
"At the same time, we've made well-judged acquisitions that bring in new technologies to strengthen leadership positions across the business, which we expect to further accelerate growth over time.
"While recognising that further work remains to achieve the full potential of our portfolio, we are encouraged with our progress towards sustainably delivering above-market growth."
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