Smith & Nephew off to strong start

Medical devices maker Smith & Nephew today said strong demand for its replacement hips and knees helped it make a good start to the year.

S&N said new surgical procedures minimising the need for incision during joint replacements helped lift revenues at the orthopaedics arm by 17% in its first quarter.

This contributed to an 11.5% rise in group revenues to £330m (€485.4m), in line with market hopes, and the firm sounded an upbeat note about prospects for its markets.

Net profits rose to £48.9m (€71.9m) in the three months to April 2, from £43.3m (€63.7m) last time.

S&N specialises in orthopaedics, endoscopy – the use of tubes to look inside the body – and advanced wound management.

It said a strong performance by orthopaedics and endoscopy offset a slower than expected start to the year by its wound management arm, whose revenues lifted by just 4% during the quarter due to distributors reducing stock levels.

The group managed to increase its share of the orthopaedic market, with particularly strong growth in the United States.

Within endoscopy, knee and shoulder repair revenues grew by an “outstanding” 21%, boosted by an improved scan camera launched last year. This helped increase revenues at the division by 10%.

Chief executive Sir Christopher O’Donnell said: “Market conditions continue to be favourable across each of our businesses.”

S&N said it continued to expect a pick-up in its revenue growth rate, particularly in the second half of the current financial year.

New products and investments in its sales force meant orthopaedics revenues should hit the target of 18% growth this year.

And the firm expected “progressive” revenues growth at its wound management arm as inventory levels stabilise during the year.

Shares were 2% lower today, down 11p at 534.5p.