6th May 2020 08:47
(Alliance News) - Smith & Nephew PLC on Wednesday reported a decline in first quarter revenue as the Covid-19 pandemic curtailed the number of elective surgical procedures taking place and said revenue had almost halved in April.
The medical device maker reported a 5.8% drop in revenue for the three months ended March 28 to USD1.13 billion from USD1.20 billion, a 7.6% drop on an underlying basis - in keeping with its March trading update.
Revenue from Smith & Nephew's Orthopaedics franchise fell 9.0% to USD497 million, Sports Medicine & ENT revenue dropped 9.5% to USD328 million. Advanced Wound Management revenue was the only unit to improve, with revenue up 7.3% at USD309 million - though Advanced Wound Management revenue was down 4.0% on an underlying basis.
Smith & Nephew explained that all of its franchises had been "held back by impact of Covid-19 to varying degrees dependent on geography and exposure to elective procedures". Fewer elective surgeries took place in the quarter as many were postponed or cancelled as a consequence of the pandemic and government measures surrounding it.
In April, revenue plummeted 47% on an underlying basis, which Smith & Nephew said reflected "suspension of elective procedures in most markets, somewhat offset by improving trading in China".
However, a return to elective surgeries has begun in some markets, such as the US, though the extent and pace of this return varies across geographies and is not certain, S&N said.
Revenue in the second quarter is expected to drop, with the company's trading margin for the first half as a whole thought to be "substantially down" versus 2019, in keeping with Smith & Nephew's previous announcements.
As such, guidance for 2020 is still withdrawn with the overall damage from Covid-19 an unknown at this stage.
Chief Executive Roland Diggelmann said: "The recovery in China is encouraging, as is the restart of elective surgeries in many other countries, and especially within the US. While there is still much uncertainty, Smith & Nephew has the financial strength to withstand this period and, as demand increases, we are ready to step up and support customers through our robust supply chain, innovative products and some new ways of working.
"Looking to the medium-term, we have a proven strategy that will continue to guide our choices. We remain committed to our ambition to consistently outgrow our markets at the same time as delivering ongoing improvements to trading profit margin."
Smith & Nephew's shares were up 2.1% at 1,622.50 pence in London on Wednesday morning.
By Anna Farley; [email protected]
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