Smith & Nephew hikes divi after beating forecasts in Q4

Medical technology group Smith & Nephew has raised its dividend by a half after a strong finish to 2012, which saw the company beat forecasts for both revenue and profit in the fourth quarter.

Medical technology group Smith & Nephew has raised its dividend by a half after a strong finish to 2012, which saw the company beat forecasts for both revenue and profit in the fourth quarter.

The board recommended a 50% increase in the final dividend to 16.2 cents per share, "reflecting our confidence in continued strategic progress and our financial strength". This pushed the total dividend for 2012 to 26.1 cents per share, also up 50%.

Revenues totalled $1,077m in the final three months of last year, down from $1,106m on a reported basis the year before due to currency exchange rates and disposals, but ahead of the consensus estimate of $1,066m. On an underlying basis, revenues increased by 3.0% year-on-year.

Underlying trading profit during the quarter increased by 2.0% to $272m, down slightly on a reported basis but still above forecasts for $260m. The company was also able to raise its trading profit margin by 10 basis points (bp) year-on-year to 25.3%.

Commenting on the results, Chief Executive Officer Olivier Bohuon said: "Smith & Nephew finished the year strongly, with both underlying Q4 revenue and trading profit up on the prior year and the completion of the Healthpoint Biotherapeutics acquisition.

"Advanced Wound Management grew at well above the market rate and the Group delivered double digit growth in the emerging markets. It was also pleasing that our Trauma performance improved."

On an underlying basis for the full year, revenues increased 2.0% to $4,137m, while trading profit rose 6% to $965m. Margins were up 80bp at 23.3%, which the company said reflected the early benefits of its 'Strategic Priorities' plan, "in particular restructuring the group to give us the right commercial models and cost structure."

Net debt rose to $288m by the end of the period (end-2011: $138m), partly due to the $782m acquisition of Healthpoint.

OutlookThe firm said that there was little change in the business environment in the Established Markets during the period, with Europe in particular continuing to be challenging. However, Emerging and International Markets delivered 14% growth and China saw revenues increase by an impressive 30%.

These market conditions are expected to be similar in 2013, according to the group's outlook statement.

However, margins are expected to fall year-on-year due to the effect of the Healthpoint acquisition and the US Medical Device excise tax.

The company said: "Smith & Nephew exited 2012 with a much stronger platform than we entered the year. In 2013 we will continue to focus on our Strategic Priorities to deliver greater value for our Company and stakeholders."

Recommended

Tech stock crash – dotcom bust 2.0 is upon us
Tech stocks

Tech stock crash – dotcom bust 2.0 is upon us

It’s carnage in the tech sector as the market crashes. But that spells opportunity for canny investors, says Matthew Lynn
19 May 2022
Three things you should learn from Bill Ackman's brilliant Netflix trade
Investment strategy

Three things you should learn from Bill Ackman's brilliant Netflix trade

Hedge fund guru Bill Ackman has lost $400m selling Netflix shares. John Stepek explains why this was a brilliant trade, and outlines three things that…
19 May 2022
Aviva: a share for income investors to tuck away
Share tips

Aviva: a share for income investors to tuck away

Insurance giant Aviva is one of the highest yielding stocks in the FTSE 100 – and it’s cheap, too, making it a tempting target for income investors. R…
18 May 2022
The ten highest dividend yields in the FTSE 100
Income investing

The ten highest dividend yields in the FTSE 100

Rupert Hargreaves looks at the FTSE 100’s top yielding stocks for income investors to consider.
18 May 2022

Most Popular

Get set for another debt binge as real interest rates fall
UK Economy

Get set for another debt binge as real interest rates fall

Despite the fuss about rising interest rates, they’re falling in real terms. That will blow up a wild bubble, says Matthew Lynn.
15 May 2022
Is the oil market heading for a supply glut?
Oil

Is the oil market heading for a supply glut?

Many people assume that the high oil price is here to stay – and could well go higher. But we’ve been here before, says Max King. History suggests tha…
16 May 2022
Value is starting to emerge in the markets
Investment strategy

Value is starting to emerge in the markets

If you are looking for long-term value in the markets, some is beginning to emerge, says Merryn Somerset Webb. Indeed, you may soon be able to buy tra…
16 May 2022