Smith & Nephew’s (SN.) new chief executive, Namal Nawana, has a big challenge ahead of him. His predecessor, Olivier Bohoun, was criticised for not sufficiently managing costs or integration processes at the woundcare specialist, so remedial measures are under way. Thankfully, the market seemed nonplussed by a reported $58m (£44m)-worth of restructuring costs in the first half, which ate into operating margins and held back reported profit growth.
Perhaps investors realise that the group’s ‘Accelerating Performance and Execution’ (APEX) programme is going to be something of a slow burn. Analysts at Numis say they’re still waiting for a full update from Mr Nawana on the group’s future strategy, but are pleased to see that established markets have returned to growth, while other actions taken in the first half should give rise to $50m in annualised benefits. Trading cash flow – adjusted for one-off items, together with amortisation, impairment and restructuring costs – came in at $387m, against $327m at the 2017 half-year, with the group converting a higher proportion of profits into cash, while reducing the net debt ratio in the process.
Analysts at Numis expect pre-tax profits of $1.04bn for 2018, giving EPS of 94.8¢, compared with $996m and 94.5¢ in 2017.
| SMITH & NEPHEW (SN.) | ||||
| ORD PRICE: | 1,372p | MARKET VALUE: | £12bn | |
| TOUCH: | 1,372-1,3723p | 12-MONTH HIGH: | 1,442p | LOW: 1,173p |
| DIVIDEND YIELD: | 2.0% | PE RATIO: | 22 | |
| NET ASSET VALUE: | 531¢* | NET DEBT: | 30% | |
| Half-year to 30 June | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
| 2017 | 2.34 | 383 | 37.0 | 12.3 |
| 2018 | 2.44 | 341 | 31.4 | 14.0 |
| % change | +4 | -11 | -15 | +14 |
| Ex-div: | 04 Oct | |||
| Payment: | 31 Oct | |||
| *Includes intangible assets of $3.64bn or 416¢ a share £1 = $1.32 | ||||
