10 February 2011 -- Smith & Nephew plc (LSE: SN, NYSE: SNN), the global medical technology business, announces its results for the fourth quarter, and full year, ended 31 December 2010.
Q4 Commentary
- Reported revenue was $1,067 million, unchanged underlying, which was an increase of an estimated 5% adjusting for the impact of four less trading days
- Reported trading profit was $278 million, underlying growth of 9%
- Trading margin improved 220 basis points to 26.0%
- EPSA increased 6% to 21.6¢
- Orthopaedics delivered a market leading global knee performance and Trauma improvement continued
- Endoscopy achieved a good performance underpinned by sports medicine repair segment
- In Advanced Wound Management NPWT continued to drive growth
- Trading profit to cash conversion ratio 80%
- Final dividend up 10% to 9.82 cents per share
Full Year Highlights
- Reported revenue was $3,962 million, up 4% underlying:
- all business and geographic segments reported underlying revenue growth
- Orthopaedic performance gained momentum with a strong second half
- Endoscopy driven by continued double digit percentage revenue growth in sports medicine repair
- Advanced Wound Management again outperformed the market
- Reported trading profit was $969 million, underlying growth of 11%
- Trading margin increased by 180 basis points to 24.5%, driven by:
- continued delivery of efficiency programmes throughout the business
- improved inventory management
- settlement relating to NPWT technology acquisition (60 basis points)
- EPSA increased 12% to 73.6¢
- Strong cash generation, net debt now below $500 million (2009 year end net debt $943 million)
- Investment in growth opportunities:
- innovation and compelling clinical data driving outperformance
- NPWT making significant progress
- emerging markets continue to grow strongly
Commenting on the fourth quarter, David Illingworth, Chief Executive of Smith & Nephew, said: “We had a strong finish to 2010, continuing the momentum seen in the previous quarter.
Four years ago we set ourselves the goal of significantly improving the efficiency of our business. Despite the economic challenges, we have achieved that goal. Not only that, but Smith & Nephew is outperforming the market in the majority of its business segments and we have built a culture of sustainably generating efficiency gains to fund our investments for growth.
The long term growth drivers underpinning our industry - including demographics, emerging markets and patients’ desire to return to an active life – remain strong. Looking forward, our strategic pillars for delivering shareholder value remain unchanged. Simply put, by giving our customers the right product, at the right time, with the right value proposition, we will continue to deliver long term growth.”
Analyst presentation and conference call
An analyst presentation and conference call to discuss Smith & Nephew’s fourth quarter and preliminary results will be held at 9:00am GMT/5:00am EST today, 10 February. This will be broadcast live on the company’s website and will be available on demand shortly following the close of the call at http://www.smith-nephew.com/Q410. A podcast will also be available at the same address. If interested parties are unable to connect to the web, a listen-only service is available by calling +44 (0) 20 7806 1953 (passcode 6202467) in the UK or +1 (212) 444 0412 (passcode 6202467) in the US. Analysts should contact Jennifer Watson on +44 (0) 20 7960 2255 or by email at jennifer.watson@smith- nephew.com for conference details.
1 Unless otherwise specified as ‘reported’ or ‘average daily sales (ADS)’, all revenue increases/decreases throughout this document are underlying increases/decreases after adjusting for the effects of currency translation. See note 3 to the financial statements for a reconciliation of these measures to results reported under IFRS.3
2 A reconciliation from operating profit to trading profit is given in note 4 to the financial statements. The underlying increase in trading profit is the increase in trading profit after adjusting for the effects of currency translation.
3 Adjusted earnings per ordinary share (‘EPSA’) growth is as reported, not underlying, and is stated before restructuring and rationalisation costs, acquisition related costs, amortisation and impairment of acquisition intangibles and taxation thereon. See note 2 to the financial statements.
4 All numbers given are for the quarter ended 31 December 2010 unless stated otherwise.
5 References to market growth rates are estimates generated by Smith & Nephew based on a variety of sources.
Enquiries
Investors
Liz Hewitt +44 (0) 20 7401 7646 Phil Cowdy Smith & Nephew
Media
Jon Coles +44 (0) 20 7404 5959 Justine McIlroy Brunswick
