22nd Feb 2022 09:33
(Alliance News) - Smith & Nephew PLC on Tuesday reported a rise in annual profit on improved trading and revenue growth in three of its global franchises, while appointing a new chief executive.
The Watford, England-based medical equipment maker posted pretax profit of USD586 million for 2021, more than doubled from USD246 million in 2020. Trading profit was USD936 million, up 37% from USD683 million in 2020, on revenue of USD5.21 billion, up 14% from USD4.56 billion.
The company credited this to improved trading compared to 2020, with its trading profit margin widening to 18% from 15%.
Smith & Nephew noted that three of its global franchises delivered full-year revenue growth.
"The growth in these franchises in 2021 was driven by strong commercial execution, investment in innovation and acquisitions," Smith & Nephew said.
The Sports Medicine & Ear, Nose & Throat and Advanced Wound Management divisions, which represents 60% of annual revenue, saw revenue above pre-pandemic levels. Less positively, Smith & Nephew said the Orthopaedics division was hurt by supply chain constraints.
Sports Medicine & ENT reported 2.1% revenue growth, ahead of both Advanced Wound Management at 1.5% and Orthopaedics at 1.2%. However, on an underlying basis, while the first two divisions both grew revenue by 2.4%, Orthopaedics revenue declined by 2.6%.
Smith & Nephew declared a final dividend of 23.1 US cents. This resulted in a full-year dividend of 37.5 cents, unchanged from 2020 and 2019.
It also made a new commitment to return surplus cash to shareholders in the form of a regular annual buyback, expected to be between USD250 million and USD300 million in 2022.
The company has appointed Deepak Nath as its new chief executive officer, succeeding Roland Diggelmann, who will step down by a mutual agreement. Nath will take up the role on April 1 and Diggelmann will leave on March 31.
Nath joins Smith & Nephew from German medical device company Siemens Healthineers AG, where he was president of the Diagnostics business segment.
The company noted headwinds from higher logistics and freight costs in 2021, as well as the Omicron variant that negatively impacted its Orthopaedics segment.
Nonetheless, Smith & Nephew expressed confidence in growth and strong cash generation going forward.
Smith & Nephew said it is targeting underlying revenue growth of 4% to 5% for 2022, with a 50 basis point expansion in trading profit margin.
"Looking to the future, we have set out our new strategy for growth with an ambition to transform to a structurally higher growth company," Diggelmann said.
"2022 will be an important step on this journey as we continue to strengthen the business and invest behind innovation, while working to offset near-term headwinds. Smith & Nephew is well placed to continue to take advantage of the opportunities we see to drive shareholder returns, including through a new share buy-back programme."
Shares in Smith & Nephew were up 2.0% at 1,202.00 pence each on Tuesday morning in London.
By Abby Amoakuh; [email protected]
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