Smith & Nephew limps to lower end of target despite stronger hips

Smith & Nephew said its full year profits to be at the lower end of its full year targets after a third quarter where growth was flat outside US and emerging markets but its artificial hips business returned to growth.

Despite the impact of Hurricanes Irma and Harvey in America, revenues were grown 3% to $1.15bn in the three months to 30 September, taking the top line for the year to date to $3.49bn, which is only 1% higher than at the same stage last year, or 3% on an underlying basis.

As a result, management expect underlying revenue growth for the full year to be at the lower end of their earlier 3-4% guided range, with profit margins also dragged down to the lower end of the 20-70 basis points range.

Chief executive Olivier Bohuon, who last month announced his intention to retire by the end of next year, highlighted that the "sustained nature of the market-beating growth" of the knee implants unit and the strong emerging markets recovery across the year.

"We delivered 3% revenue growth in the quarter, in-line with guidance despite the recent natural disasters in the Americas delaying some procedures."

Smith & Nephew grew sales 1% from its established markets, with the US up 2% underlying to $545m and other established markets up 3% to $412m and emerging markets jumping 9% to $195m.

Looking at the quarter by each of the group 'franchises', gainers included sports medicine up 8%, other surgical businesses were up 6%, reconstruction was up 4% and knees continued to jerk higher and hips returned to growth, wound bioactives were up 7% and wound devices up 8%.

Declines were sustained at arthroscopic technologies, which fell 3%, trauma & extremities dropped 2% and advanced wound care was down 1%.

"Looking ahead," said Bohuon, our focus on accelerating the top-line is unchanged and we are also starting the next stage in our continuing drive to improve efficiency across the Group. I am as determined as ever to keep pushing for further success, and to leave Smith & Nephew an even better company."