30th Mar 2020 09:53
(Alliance News) - Smith & Nephew PLC on Monday withdrew its prior financial guidance, issued in February, due to the rapid expansion of the virus beyond China since then and said that it will not give further guidance until the situation becomes clearer.
The medical devices company had said it expected its underlying revenue growth to be in the range of 3.5% to 4.5% in 2020. In addition, the company had said it expected to deliver a 2020 trading profit margin at or slightly above the 2019 level of 22.8%. In 2018, trading margin stood at 22.9%.
"Overall it is too early to determine the consequent impact of the Covid-19 pandemic on our business. In China, elective [surgical] procedures have restarted, but currently remain considerably below pre-outbreak levels. In Europe and the US a range of policy responses are now being implemented, including stopping all but the most urgent surgical procedures. It is difficult to determine how long the situation will last, the speed of normalisation thereafter, and the timing of catch-up of postponed procedures," the company said.
Smith & Nephew, which reports first-quarter earnings in May, expects that underlying revenue growth for the first quarter will be around 8% lower on the first quarter of last year. It also expects that second quarter revenue and first half trading margin will be substantially down on the prior year.
Roland Diggelmann, chief executive officer of Smith & Nephew, said: "Looking beyond the immediate future, Smith & Nephew operates in attractive markets with excellent growth fundamentals. We are financially strong with a proven strategy and unique portfolio. Our major manufacturing and distribution facilities are all active and we are ready to meet pent-up demand when the time comes."
At 2019-end, the company had net debt of USD1.6 billion compared to committed facilities of USD2.9 billion as well as a further USD550 million of senior notes which will be drawn down in June.
Shares in the company were down 1.4% at 1,407.50 pence each in London on Monday morning.
By Tapan Panchal; [email protected]
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