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

Broker safety – your questions answered
Investment strategy

Broker safety – your questions answered

Cris Sholto Heaton answers more of your questions about the safety of stockbroker accounts
25 Mar 2020
How demographics affects stock valuations
Investment strategy

How demographics affects stock valuations

New research suggests that stock and bond valuations are driven by the age of the population – at least in the US.
24 Feb 2020
Do you own shares in Sirius Minerals? Here’s what you need to do now
Stocks and shares

Do you own shares in Sirius Minerals? Here’s what you need to do now

Mining giant Anglo American has proposed a cash takeover of Yorkshire-based minnow Sirius Minerals. Unhappy shareholders must decide whether to accept…
20 Feb 2020
Why investors should be “cautiously bullish” for 2020
Stockmarkets

Why investors should be “cautiously bullish” for 2020

Analysts have been out in force making rosy predictions for stockmarkets in 2020, but while there is certainly a case for optimism, investors should r…
17 Jan 2020

Most Popular

Oil producers are back at their Covid-19 lows – is it time to buy?
Oil

Oil producers are back at their Covid-19 lows – is it time to buy?

With demand for oil hammered by Covid-19 and talk of “peak oil demand”, there are lots of good reasons to be bearish on oil producers. So, asks John S…
22 Sep 2020
The rising dollar is proving bad news for most other assets – will it last?
Investment strategy

The rising dollar is proving bad news for most other assets – will it last?

Precious metals, stocks and pretty much every other asset has taken a tumble as the US dollar strengthens. Dominic Frisby looks at how long this trend…
23 Sep 2020
Why you should stuff your end-of-pandemic portfolio with Chinese stocks
China stockmarkets

Why you should stuff your end-of-pandemic portfolio with Chinese stocks

For an end-of-pandemic portfolio, you need assets that can cope with today’s volatility. And that, says Merryn Somerset Webb, means Chinese stocks.
14 Sep 2020