30th Jul 2015 13:50
LONDON (Alliance News) - Smith & Nephew PLC Thursday reiterated its expectations for its full year and lifted its interim dividend, as it posted a rise in pretax profit for its first half.
The medical devices maker posted a pretax profit of USD411 million for the half year to June 27, up from USD349 million a year before, on revenue of US2.27 billion, up from USD2.22 billion.
For its first half revenue rose 2%, as a foreign exchange hit from the strength of the dollar was offset by a 7% boost from its acquisition of ArthroCare last May. The company said that ArthroCare is performing in line with its expectations.
In the US, revenue was up 3%, while it was up by 18% in Emerging Markets, although this was offset by a flat performance in other established markets.
In the second quarter, the company's sports medicine joint repair franchise saw revenue up 7%. Its other surgical business franchise also saw revenue up 7%, and within this the ear, nose and throat business it acquired with ArthroCare continued to improve. Its advanced wound care business saw revenue up 12%, boosted by actions it took in the US during its first quarter, and advanced wound bioactives revenue rose 6%.
Advanced wound devices revenue fell 9% in the quarter, due to the company having been required to halt distribution of its negative-pressure wound therapy system Renasys. The company said it has decided to focus its investment on re-entering the US market with its next generation of the product during the course of 2016, although it is also making progress in securing the required approvals for the product so it can begin to support existing customers in 2015.
Smith & Nephew proposed a dividend of 11.8 cents per share, up from 11.0 cents a year before.
The company continues to expect to deliver higher underlying revenue growth in 2015 than in 2014, and a year-on-year improvement in trading profit margin. If current exchange rates continue throughout 2015, it said it expects a hit of around 7% to its full year revenue.
"In the first half of 2015, we delivered higher underlying revenue growth, trading profit margin and earnings year-on-year. We made a number of acquisitions, strengthening our technology and product portfolio and Emerging Markets business. Our efficiency programmes are progressing to plan, enhancing the bottom line," said Chief Executive Officer Olivier Bohuon in a statement.
"Where we have invested to improve existing businesses, we are beginning to reap the benefits. I am confident we are firmly on-track with our strategy to invigorate the growth profile of Smith & Nephew," Bohuon added.
Despite the positive results, Shore Capital has reiterated its Sell rating on the stock. Whilst it is pleased the company is diversifying away from its roots in orthopaedic reconstruction, it remains concerned over pressures on the business. It is concerned that the investment needed to create growth and innovation with be at the expense of margins and earnings growth.
Shares in Smith & Nephew were up 1.6% at 1,153.00 pence Thursday afternoon.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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