Smith & Nephew's (SN.) full-year figures were somewhat overshadowed by chief executive Olivier Bohuon's $1.7bn (£1.04bn) deal to buy US-listed medical technology outfit ArthroCare (US: ARTC), announced a few days before. Yet the hip and knee group's numbers were strong, with earnings of 76.9¢ a share some 2 per cent ahead of consensus forecasts. Broker Investec, which currently has EPS of 83.5¢ pencilled in for this year, expects to upgrade its numbers by 2-5 per cent.
Owning ArthroCare will allow Smith & Nephew to capitalise on already strong growth in the US. The group's orthopaedic reconstruction business delivered 11 per cent growth in knee-replacement sales in the region last year, driving total US sales up 9 per cent.
The group has also focused on expansion into emerging markets, seemingly undeterred by the weakening macroeconomic outlook and in line with a renewed strategic focus on acquisition-led growth. It completed the acquisition of a Brazilian wound management distributor and a surgical devices supplier in Turkey during the year.
Reported profits were hit by higher costs associated with these acquisitions and the amortisation of goodwill from Healthpoint, a wound care specialist Smith & Nephew bought in 2012. Adjusting for this, underlying operating profits rose 5 per cent to $987m.
SMITH & NEPHEW (SN.) | ||||
|---|---|---|---|---|
| ORD PRICE: | 903p | MARKET VALUE: | £8.1bn | |
| TOUCH: | 902-903p | 12-MONTH HIGH: | 910p | LOW: 693p |
| DIVIDEND YIELD: | 1.9% | PE RATIO: | 24 | |
| NET ASSET VALUE: | 453p* | NET DEBT: | 6% | |
| Year to 31 Dec | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2009 | 3.77 | 670 | 53.4 | 14.4 |
| 2010 | 3.96 | 895 | 69.3 | 15.8 |
| 2011 | 4.27 | 848 | 65.3 | 17.4 |
| 2012 | 4.14 | 1,092 | 80.4 | 26.1 |
| 2013 | 4.35 | 802 | 61.7 | 27.4 |
| % change | +5 | -27 | -23 | +5 |
Ex-div: 16 Apr Payment: 7 May *Includes intangible assets of $2.31bn, or 259p a share £1=$1.63 | ||||
