Smith & Nephew’s strong profits beat expectations
Smith & Nephew (S&N), the hips-and-knees
maker, posted higher profits in the final
quarter of last year after the replacement
joints market stabilized.
suffered during the recession, but started
to recover in the second half.
Traditional hip and knee ranges, like its
Legion knee, did well, particularly in the
US, while products designed for younger,
more active patients, such as the
bone-sparing Birmingham Hip Resurfacing
System, were weak.
Younger patients were more likely to put
off surgery than retirees because they did
not want to take time off work or balked at
"Our largest business, orthopaedics, saw
a good finish to a tough year," said chief
executive David Illingworth. "Market
conditions were a little less difficult than
in the first half."
He said it’s too early to say when
patients who deferred operations might have
them done, and S&N is struggling to push
through price increases as governments and
private clients have tightened their
budgets. But Illingworth was hopeful that
the $12bn global market for
replacement joints would improve, with
consumer confidence returning and
unemployment now falling.
S&N expects revenues in orthopaedics to
grow at the market rate this year after
lagging in 2009.
Profits before tax rose to $175m in the
fourth quarter from $162m a year earlier,
with revenues 11 per cent higher at $1.07bn,
helped by strong sales at the wound
Analysts and investors welcomed the
results, and the shares closed up 4.3 per
cent at 660p.