Smith & Nephew revenue growth tops full-year forecasts

27th Feb 2024 07:22

(Sharecast News) - Medical device giant Smith & Nephew reported fourth-quarter revenue of $1.46bn on Tuesday, marking a 6.4% increase on an underlying basis compared to the prior year.

The FTSE 100 company said that growth trend continued throughout the year, with full-year revenue hitting $5.56bn, up an underlying 7.2% and surpassing expectations.

Its orthopaedics segment saw 5.7% underlying growth, while the sports medicine and ENT division experienced 10% underlying growth, despite challenges posed by a sluggish Chinese market.

Advanced wound management maintained its momentum from the prior year, achieving 6.4% underlying revenue growth.

Smith & Nephew said its trading profit rose 7.6% on a reported basis to $970m, with a trading profit margin of 17.5%, in line with its guidance.

Operating profit for the year was reported at $425m, while the firm generated significant cash flow from operations of $829m.

Earnings per share reached 30.2 cents compared to 25.5 cents in the prior year, with the board declaring a full-year dividend of 37.5 cents per share, consistent with the dividend paid in 2022.

Looking ahead, Smith & Nephew said it was optimistic despite challenges such as continuing inflation and headwinds from China volume-based procurement within sports medicine joint repair.

The company said it expected positive operating leverage and benefits from its 12-point plan to offset those challenges.

For 2024, Smith & Nephew anticipated underlying revenue growth in the range of 5% to 6%, with a trading profit margin expected to be at least 18%.

The company's midterm targets remained unchanged.

"I am pleased with our overall performance in 2023, as our actions to transform Smith & Nephew have begun to translate into meaningful financial outcomes," said chief executive officer Deepak Nath.

"We delivered revenue growth ahead of guidance for the full year and made important improvements to our trading profit margin against a challenging macro-environment.

"Our 12-point plan is on track - while there is more to do to enhance our performance in US reconstruction, our orthopaedics business is progressing along a clear improvement path. 2023 was another year of good growth for our Sports medicine and ENT and advanced wound management businesses."

Nath said the company's investment in innovation was delivering, with almost half of its 2023 growth coming from products launched in the last five years.

"We were pleased to add major launches in robotics, shoulder arthroplasty and negative pressure wound therapy to the portfolio during the year.

"We have entered 2024 as a fundamentally stronger business and look forward to delivering another year of robust growth and further margin expansion."

At 0813 GMT, shares in Smith & Nephew were up 4.31% at 1,174p.

Reporting by Josh White for Sharecast.com.