Smith & Nephew Q2 Pretax Profit Down, Revenue Rises; Confident Of FY14 View

(RTTNews) - Smith & Nephew Plc (SN.L, SNN) reported Friday a decline in second-quarter profit on higher expenses, even as revenues were benefited mainly by acquisitions and strong growth in emerging & International Markets. Further, the company announced higher dividend.

Looking ahead, the medical technology company said it remains confident in its overall Group outlook for the full year, and continues to expect growth in trading profit margin.

For the second quarter, pretax profit decreased to $128 million from $188 million in the prior year. Attributable profit was $89 million, compared to $129 million a year ago. Earnings per share was 9.9 cents, compared to 14.2 cents a year ago.

Adjusted attributable profit increased to $182 million from $163 million. Adjusted earnings per share in cents was 20.4, compared to 18.0, last year. Adjusted earnings were 102 cents per American Depositary Share.

The reported operating profit of $134 million declined from prior year's $188 million, reflecting acquisition costs largely relating to ArthroCare, as well as restructuring and rationalisation costs, amortisation of acquisition intangibles and legal and other items.

Trading profit, however, increased 10 percent from last year to $255 million. Underlying profit growth was 6 percent. Trading profit margin improved up 70 basis points to 22.3 percent from 21.6 percent last year.

Revenue for the quarter rose 7 percent to $1.15 billion from $1.07 billion last year. Foreign exchange added 1 percent to revenues, and acquisitions added 3 percent. Revenue was up 3 percent on an underlying basis.

Group revenue from Established Markets went up 1 percent. Within this, US revenue grew 4 percent, while revenues in Other Established Markets dropped 3 percent.

Emerging & International Markets revenue growth remained strong, increasing 17 percent from last year.

Segment-wise, Advanced Surgical Devices global's underlying revenues grew 4 percent, while Advanced Wound Management global's revenues remained flat on an underlying basis.

The company said it experienced improved performance in Sports Medicine Joint Repair, Trauma & Extremities and Orthopaedic Reconstruction divisions.

Further, the Board of Smith & Nephew confirmed that the interim dividend for the first half of 2014 is 11.0 cents per share, higher than last year's 10.4 cents.

Looking ahead, Smith & Nephew said in its statement, "We anticipate that the prevailing market conditions seen in the first half of 2014 will continue throughout the rest of the year. We expect the Established Markets to be broadly stable with some signs of improvement, and the increasingly important Emerging & International Markets to continue to offer good opportunities for stronger growth."

In London, Smith & Nephew shares were gaining 10 pence or 0.97 percent, and trading at 1,036 pence.