Olivier Bohuon, chief executive at Smith & Nephew (SN.), told analysts he had "underestimated the transformation required" at the company, and how it would impact group performance. Over the past five years profit and earnings have fallen and 2016 was little different, if you strip out the $326m (£259m) sale of the group's gynaecology business. Trading profit and adjusted EPS fell 7 per cent and 3 per cent, respectively.
The difficulties last year came predominantly from destocking in China and low demand from the oil-dependent Gulf states. This had a big impact on the trauma and woundcare businesses, pushing revenue down 4 per cent and 3 per cent, respectively, in the fourth quarter. The overall revenue knock was, however, softened by continued strong demand for sports medicine products in the US - Smith & Nephew's largest market.
But despite the difficulties of 2016, Mr Bohuon is looking to the current financial year with confidence. The strategic realignment has now concluded and acquisitions have enhanced the portfolio. The group expects underlying revenue growth of 3-4 per cent in 2017 and a 20-70 basis point trading profit margin improvement.
Before these numbers, Numis expected pre-tax profits of $1.1bn in 2017, giving adjusted EPS of 90.9p.
SMITH & NEPHEW (SN.) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,153p | MARKET VALUE: | £10.1bn | |
| TOUCH: | 1153-1154p | 12-MONTHHIGH: | 1,324p | LOW: 1,041p |
| DIVIDEND YIELD: | 2.1% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 452ȼ* | NET DEBT | 39% | |
| Year to 31 Dec | Turnover ($bn) | Pre-tax profit ($bn) | Earnings per share (ȼ) | Dividend per share (ȼ) |
|---|---|---|---|---|
| 2012 | 4.14 | 1.09 | 80.4 | 26.1 |
| 2013 | 4.35 | 0.80 | 61.7 | 27.4 |
| 2014 | 4.62 | 0.71 | 56.1 | 29.6 |
| 2015 | 6.63 | 0.56 | 45.9 | 30.8 |
| 2016 | 4.67 | 1.06 | 88.1 | 30.8 |
| % change | -30 | +90 | +92 | - |
Ex-div: 30 Mar Payment: 10 May *Includes intangible assets of $3.6bn, or 411ȼ a share £1=$1.26 | ||||
