April 30, 2009 / 6:25 AM / 10 years ago

UPDATE 3-Smith & Nephew sees downturn hit

* Adjusted EPS $0.131, in the middle of consensus range

* Revenues $865 mln, at the lower end of consensus range

* Endoscopy revenues flat, hit by downturn

* Shares down about 1 percent, underperform market (Adds share price, analyst reaction, CEO comments)

By Ben Deighton

LONDON, April 30 (Reuters) - Smith & Nephew (SN.L), Europe’s biggest medical devices maker, saw its revenue growth fall in the first quarter as cash-strapped patients and hospitals cut back.

The British company said first-quarter adjusted earnings per share was $0.131, against $0.128 in the same period last year, in the middle of a range of ten analysts’ forecasts of $0.12 to $0.14 provided by the company.

However, revenues for the period were $865 million, against the $850 million to $896 million expected by analysts. At an underlying rate of 4 percent, the pace of revenue growth was significantly slower than the 22 percent rise booked a year ago.

The company saw growth in its hip area of 2 percent, mostly due to the United States where it experienced a weaker performance of its leading Birmingham Hip Resurfacing System.

“There is going to be a situation where I think patients will be delaying and deferring some procedures,” said Chief Executive David Illingworth. “What we’re saying is I think we’ll still some downward pressure (in its resurfacing business).”

The company also said endoscopy revenues were flat on the prior year at $179 million, affected by the macro economic impact on hospitals and patients.


Shares fell back from a high of 501 pence a share to be down about 1 percent at 480.5 pence by 0911 GMT, following its call with analysts.

“This is the first time they’ve admitted that the difficult macro environment presents additional risks to them hitting their Earnings Improvement Programme margin targets,” said analyst Charles Weston at Nomura Code Securities.

Smith & Nephew reported an increase in trading margin of more than 1 percent for the quarter. Under its Earnings Improvement Programme the company aims to improve trading margins by 1 percent every year until 2010.

Smith & Nephew trades at 11.35-times estimated 2009 earnings, against the FTSE Medical Equipment and Supplies average of 12.85-times. (Editing by Dan Lalor and Andrew Macdonald)

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