Smith & Nephew revenues hit £500m for first time

Aug 7 2008

Europe’s largest medical devices firm, Smith & Nephew, which manufactures hip implants in Birmingham, has posted better-than-expected second-quarter earnings as revenues hit £500 million for the first time, boosting its stock.

The group confirmed its outlook for the full year, including the impact of problems at its Plus Orthopaedics, where the company revealed it had uncovered “unacceptable” sales practices three months ago.

Chief executive David Illingworth said: “We have generated quarterly revenues of $1 billion (£512 million) for the first time, as a result of a very solid performance across all of our businesses.

“In Reconstruction we have seen good growth in both our hip and knee product lines; in Trauma the actions we have taken in sales management have begun to pay off; Endoscopy has delivered double-digit revenue growth and in Advanced Wound Management we have outperformed the market. We are confirming our guidance for the full year and we believe that the long term outlook for our business is excellent,” he added.

In Orthopaedic Reconstruction, global hip revenue growth was a solid seven per cent due to good contributions across all products and regions.

The Birmingham Hip Resurfacing System now has an estimated 3.5 per cent share by volume of the total US hip market after only two years in the market.

Investors welcomed the performance.

Nomura Code analyst Charles Weston said: “All the divisions did well on their sales and they’ve confirmed that the sales hit from Plus will be $100 million (£51 million), which is effectively positive because there are no new negatives.”

Pre-tax profit rose to £80 million from £75.3 million a year earlier. Sales were £512 million, an underlying increase of eight per cent, or 23 per cent on a reported basis.