Smith & Nephew share price: Group updates on Q3 performance

on Oct 30, 2014
Listen, Thursday, October 30: Smith & Nephew Plc (LON:SN) has today issued a third-quarter statement.

· Revenue was $1,148 million, up 3% underlying and 12% on a reported basis
· Trading profit was $246 million, up 3% underlying and 10% on a reported basis
· Trading profit margin was 21.4%, down 20bps
· EPSA 19.5¢, up 14%
· Performance accelerated in Sports Medicine and Trauma & Extremities, driven by recent product introductions and investment in the sales force
· US orthopaedic reconstruction grew at 4%, with Hip Implants up 6%
· Emerging & International Markets revenue up 20%; improved contribution from Brazilian acquisitions
· $188 million cash repayment of loan and interest received after quarter-end from Bioventus
Commenting on Q3, Olivier Bohuon, Chief Executive Officer of Smith & Nephew, said:

“We are delivering on our strategy to rebalance Smith & Nephew by strengthening our higher growth platforms, which currently represent more than half the business, up from just 35% three years ago. Sports Medicine Joint Repair and Advanced Wound Bioactives both produced double-digit growth in the quarter, and the emerging markets business increased revenue by 20%. We are pleased with our momentum, enhanced by Group optimisation, tax improvement and the acquisition of ArthroCare. EPSA grew 14% in the quarter.”
**Nine months to 27 September 2014**

For the nine month period, reported revenues were $3,368 million, up 2% on an underlying basis year-on-year (2013: $3,176 million). Trading profit was $730 million (2013: $695 million) with the trading profit margin 21.7% (2013: 21.9%). Operating profit was $523 million (2013: $575 million).

The net interest charge was $12 million (2013: income of $3 million), mainly reflecting the financing of the ArthroCare acquisition. The tax charge of $161 million (2013: $176 million) is based upon an estimated effective rate for the full year of 28.0% on Trading results. Adjusted attributable profit was $514 million (2013: $484 million) and attributable profit was $341 million (2013: $394 million).

Adjusted earnings per share in the period was 57.6¢ (288.0¢ per ADS) (2013: 53.6¢). Reported basic earnings per share was 38.2¢ (191.0¢ per ADS) (2013: 43.6¢). For the nine-month period the adjusted earnings and basic earnings per ADS calculated according to the new ADS to ordinary share ratio (effective 14 October 2014) is 115.2¢ and 76.4¢ respectively.

Trading cash flow was $415 million, compared with $596 million a year ago, representing a trading profit to cash conversion ratio of 57% (2013: 86%).


Our outlook for the Group for the full year remains unchanged.

The quarter positively reflects our strategy to rebalance towards higher growth markets, and we have many actions underway to further build upon these achievements.
*h*More to follow…*h*


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