Smith & Nephew pledges improvement after weak growth

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Medical device maker Smith & Nephew pledged to improve its performance this year as it reported sluggish full-year growth for 2016, with weakness in emerging markets continuing to hamper its business.

Fourth quarter revenues at the FTSE 100 group, which makes sports medicine, implants and other medical devices, were 3 per cent lower than the same period the previous year, at $1.2bn.

That decline brought its full-year revenues to $4.7bn, a 1 per cent increase almost exactly in line with consensus estimates.

Pre-tax profit almost doubled to $1.1bn, though the comparison to 2015 was skewed by a $326m gain from the disposal of its gynaecology business in August.

The company said fewer headwinds in China and the Gulf, along with improving execution within its business, would drive stronger growth this year. While reported revenue growth is expected to remain relatively weak at 1.2 to 2.2 per cent at current exchange rates, it said “underlying” revenue growth should pick up from 2 per cent in 2016 to 3 to 4 per cent in 2017.

Olivier Bohuon, Smith & Nephew chief executive, said:

Whilst we still delivered growth in 2016 it was not at the level we had wanted. However, I was pleased with our 2016 performance in areas such as sports medicine and knee implants, where we maintained strong momentum. Market conditions in China and the gulf states together shaved more than a percentage point of growth off the group in 2016. China returned to growth in the second half, as did the emerging markets as a whole.

I am confident we now have the right structure and capability in place and are focused on improving execution across the group, with a clear set of actions underway.

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