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Smith & Nephew margins and underlying profits improve despite flat revenues

Last updated: 03:50 06 Nov 2009 EST, First published: 04:50 06 Nov 2009 EST

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Medical technology company Smith & Nephew (LSE: SN, NYSE: SNN) announced their third quarter results for the current financial year. The results for the period showed a ‘strong performance’, with a 22% increase in underlying profit and improving trading margins. According to Smith and Nephew, market conditions remain challenging but they are seeing early signs of stabilisation.


Despite the apparent positivity of the interims investors seemed fairly unmoved.


In the quarter Smith & Nephew reported revenues of US$915 million, which represents underlying growth of 1%.

Trading margins improved by 410 basis points to 22.8%, which has subsequently led to a 22% increase in underlying trading profits to $208 million. Adjusted Earnings per Share (EPS) also improved, increasing by 38% to 16.8 cents, partly due to lower estimated tax rate.


 “We are encouraged by improvements in some key parts of our business, including US Reconstruction, arthroscopic repair and Negative Pressure Wound Therapy, together with continued strength in our European Advanced Wound Management and European Endoscopy businesses and our growth from emerging markets,” stated CEO David Illingworth.


Illingworth went on to say the company was well positioned as market conditions improve due to the company’s continued investment in new products and medical education programmes.


Overall revenue guidance remains unchanged from the previous quarter.

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