Smith & Nephew 2009 Preliminary results - strong finish to the year
11 February 2010
Smith & Nephew plc (LSE: SN, NYSE: SNN), the global medical technology
business, announces its results for the fourth quarter, and preliminary
results for the year, ended 31 December 2009.
3 months* to 12 months to
Dec Dec Underlying Dec Dec Underlying
31 31 31 31
2008 2009 Increase 2008 2009 Increase
USDm USDm % USDm USDm %
Revenue(1) 960 1,066 4 3,801 3,772 2
Trading profit(2) 222 254 9 776 857 15
Operating profit(2) 179 189 630 723
Trading margin(%) 23.2 23.8 60bps 20.4 22.7 230 bps
EPSA (cents)(3) 16.6 20.3 55.6 65.6
EPS (cents) 13.3 14.5 42.6 53.4
Business Unit
revenue(1)
Orthopaedics 550 593 2 2,158 2,135 1
Endoscopy 206 230 6 800 791 1
Advanced Wound
Management 204 243 8 843 846 6
* Q4 2009 comprises 64 trading days (2008 - 63 trading days)
Full Year Highlights
* Reported revenue USD3,772 million, underlying growth of 2%:
- traditional hip and knee ranges performed well, particularly
in the US
- strong sports medicine repair sales growth, capital equipment
market remains weak
- Advanced Wound Management outperformed its market
* Reported trading profit USD857 million, up 15% underlying
* Trading margin increased 230 basis points to 22.7%, driven by:
- efficiency programmes and rigorous cost control
- manufacturing operational improvements across all businesses
- new Advanced Wound Management manufacturing facility in China
* EPSA increased 18% to 65.6 cents, benefiting from a lower tax
rate
* Strong cash generation, net debt now below USD1 billion
* Investment in growth opportunities:
- NPWT continues to gain momentum
- strong growth from emerging market business
- construction of new surgeon education facilities in the UK,
Switzerland and China
* Second interim dividend up 10% to 8.93 cents per share
Q4 Commentary
* Reported revenue USD1,066 million, underlying growth of 4%
* Reported trading profit USD254 million, up 9% underlying
* Trading margin rises 60 basis points to 23.8%
* EPSA increased 22% to 20.3 cents, benefiting from a 25.0% tax
rate
* Orthopaedics improves on the previous two quarters, driven by US
Reconstruction performance
* Endoscopy repeats strong Arthroscopy sales growth
* Robust Advanced Wound Management performance
Commenting on the full year, David Illingworth, Chief Executive of
Smith & Nephew, said:"Smith & Nephew has exited 2009 with positive
underlying revenue
growth, strong trading margin improvement and has delivered trading
profit growth of 15%.
We have accomplished this by focusing on our customers and providing
them with innovative products which offer clinical and cost efficiency
benefits. We are continually looking for, and delivering, greater
efficiency across our operations, which is allowing us to increase our
investment in growth opportunities, such as new products and geographic
expansion.
We had a strong finish to the year and are pleased with our
achievements in these challenging conditions. We have successfully
improved many areas of Smith & Nephew's business and are working hard
at the remaining areas, as well as identifying further opportunities.
We are confident that we have the strategy, and people, to deliver
continued sustainable long-term growth for our shareholders."
Analyst presentation and conference call
An analyst presentation and conference call to discuss Smith & Nephew's
fourth quarter and preliminary results for the year will be held at
9.00am GMT/4.00am EST today, Thursday 11 February. This will be
broadcast live on the company's website and will be available on demand
shortly after the close of the call at http://www.smith-nephew.com/Q409.
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) 201 104 3230 in the UK or +1
347 532 1804 in the US. Analysts should contact Sarah Halestrap on +44
(0) 20 7960 2257 or by email at sarah.halestrap@smith-nephew.com for
conference details.
Notes
1 Unless otherwise specified as 'reported', 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.
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 of
acquisition intangibles and impairments and taxation thereon. See
note 2 to the financial statements.
4 All numbers given are for the quarter ended 31 December 2009 unless
stated otherwise.
Enquiries
Investors +44 (0) 20 7401 7646
Liz Hewitt
Phil Cowdy
Smith & Nephew
Media
Jon Coles +44 (0) 20 7404 5959
Justine McIlroy
Brunswick - London
Cindy Leggett-Flynn +1 (212) 333 3810
Brunswick - New York
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