Smith & Nephew expects profit margins to continue to improve this year after beating market expectations for 2023 earnings.
The British medical equipment maker posted a trading profit of $970million (£764million) for the year ended 31 December, slightly above forecasts of $966million, thanks to strong sales at its orthopaedics and wound managements divisions.
The FTSE 100-listed firm reported trading profit margins for the year was expected to be ‘at least 18 per cent’, up from the 17.5 per cent it achieved last year.
The British medical equipment maker’s good results were mainly driven by strong sales at its orthopaedics and wound managements divisions
The company expects revenue to increase 5 per cent to 6 per cent on an underlying basis in 2024, compared with the 7.2 per cent growth achieved in the previous year.
Deepak Nath, chief executive officer of Smith & Nephew, said: ‘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.’
Smith & Nephew shares were up 2.80 per cent to 1,157.00p in Tuesday morning trading.
Mark Crouch, analyst at investment platform eToro, said: ‘Shareholders have witnessed a 25 per cent rally since November and despite sticky inflation impeding the company’s progress, this set of results may reassure investors that Smith & Nephew are on the road to recovery.’
S&N is a medical equipment company which develops, manufactures, and markets medical devices for use in orthopaedic reconstruction, trauma and clinical therapies, sports medicines and advanced wound management.
Before the Covis-19 outbreak, S&N consistently delivered operating margins of over 20 per cent. The last few years have been less impressive, with margins contracting to 11 per cent in 2020 and only recovering to 16.8 per cent in 2022 – the result of global supply chain challenges and inflation.
This deterioration in performance led to the recruitment of a new CEO, Dr Deepak Nath, from Siemens Healthineers AG in April 2022.
After just 18 months in charge, much has changed under his leadership, with the group targeting a recovery in margins to above 20 per cent by 2025.
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