Shares in Smith & Nephew (SN.) have flatlined as whispers of a possible takeover have died away. Last year much was made of a possible bid from Michigan-based medical devices company Stryker (US:SYK), but so far nothing has materialised. Instead, it seems chief executive Olivier Bohuon has focused on the job at hand, resulting in a solid set of first-half results from the woundcare and orthopaedics specialist.
First-half sales of $2.27bn (£1.45bn) were driven by underlying growth of 4 per cent, with a 9 per cent currency hit largely offset by a 7 per cent boost from acquisitions. Operating margins rose 290 basis points, buoying operating profits by more than a fifth to $439m.
During the second quarter, advanced woundcare sales were 12 per cent higher thanks to new management and a refocused salesforce in the US, while sports medicine and joint repair sales rose by 7 per cent. Advanced wound device revenues fell by 9 per cent, however, as the US kept its distribution moratorium on high-tech dressing product Renasys. Rather than fight the regulatory block, Smith & Nephew plans to redirect investment into a next-generation product due to launch in 2016.
Analysts at Numis expect pre-tax profits of $1.07bn this year, giving EPS of 87.3ȼ, compared with $1.03bn and 83.2ȼ in 2014.
| SMITH & NEPHEW (SN.) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,157p | MARKET VALUE: | £10.3bn | |
| TOUCH: | 1,157-1,158p | 12-MONTH HIGH: | 1,216p | LOW: 881p |
| DIVIDEND YIELD: | 1.7% | PE RATIO: | 29 | |
| NET ASSET VALUE: | 453ȼ* | NET DEBT: | 37% | |
| Half-year to 27 June | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (ȼ) | Dividend per share (ȼ) |
|---|---|---|---|---|
| 2014 | 2.22 | 349 | 26.8 | 11.0 |
| 2015 | 2.72 | 411 | 33.0 | 11.8 |
| % change | +2 | +18 | +23 | +7 |
Ex-div: 8 Oct Payment: 27 Oct *Includes intangible assets of $3.68bn, or 411ȼ a share £1 = $1.56 | ||||
