Smith & Nephew sees strong 2011 despite conditions

MEDICAL technology group Smith & Nephew, whose UK orthopaedics operation is based at Warwick Technology Park, has seen good revenue performance during 2011 set against a challenging market backdrop.  

The US-based group delivered revenues of £2.7bn (£$4.3bn) in 2011, 8% reported and 4% underlying growth year-on-year.  All three of its businesses positively contributed to this good revenue growth.  Trading profit was £609m ($961m) trading profit margin was 22.5%.

The group said it expected the tough market conditions to persist throughout the year ahead.
 
During 2012, it said it expected its sports medicine franchise to slightly outperform the market, while it also expects to continue to grow at above the market rate in Advanced Wound Management.   

“We expect Orthopaedic Reconstruction to grow at close to the market rate.  Sales of our premium knee implant products will continue to annualise and on-going negative metal-on-metal perceptions will affect hip implant sales,” it said.

For 2011, Orthopaedics achieved annual revenues of £1.466bn ($2.3bn) and grew by 2%.  In the US it grew 2%, in Europe there was a 1% decline while the performance in the rest of the world, especially in the emerging markets was more encouraging, up 7%.  Orthopaedic Reconstruction grew by 2%, Orthopaedic Trauma 3% and Clinical Therapies by 6%.

In Orthopaedic Reconstruction, where the group owns the Birmingham Hip Resurfacing System, it said it had exceeded the estimated market growth rate of 1%.  Orthopaedic Trauma underperformed in the second half of the year and the firm said it was taking action to address this.  

In Clinical Therapies, all products contributed and the group confirmed its intention of moving this business into a new venture, Bioventus. This will be jointly owned by Smith & Nephew and Essex Woodlands, a specialist healthcare growth equity and venture capital firm. The move is expected to be concluded during the first half of this year.

Advanced Wound Management delivered revenues of £646m ($1.019bn) in the year, an increase of 7%, and the first time the business has exceeded the $1bn revenue mark.  The division grew at more than double the estimated market rate of 3% and Smith & Nephew said moves to make the operation more cost-effective had been well received.
 
Olivier Bohuon, Smith & Nephew chief executive, said: “We are building momentum every day and I am confident the result will be a business that is stronger, growing faster, better balanced and fit and effective for the future.”