Shares in artificial knees and hips maker Smith & Nephew (SN.) topped the FTSE 100 leader board on Thursday, sprinting 6.1% higher to £15.75 after the company reported underlying first quarter revenues growth of 6.2% which was ahead of market expectations.

First quarter reported revenues to 3 April 2021 grew 11.5% to $1.26 billion which benefited from a foreign exchange tailwind of 3.4% and acquisition related growth of 1.9%.


All three global franchises returned to growth on an underlying basis with China showing the likely direction and speed of travel once other regions fully open, showing strong growth and contributing to the 21.8% underlying growth from emerging markets.

Established markets grew 3.4% driven by a strong 7.1% rebound in the US, offset by a 1.8% decline mainly attributed to Europe which continues to lag in its vaccination programmes.


The return of elective surgeries gave the Sport Medicine and Ear Nose and Throat franchise a boost, resulting in 10.4% underlying growth.

Better commercial execution contributed to an impressive 9.3% growth in the Advanced Wound Management franchise while weaker knee implants offset ‘strong growth’ in hip implants and Trauma and Extremities, resulting in 1.6% growth in Orthopaedics.

Chief executive Roland Diggelmann commented: ‘Looking ahead, there is improving visibility as vaccine programmes roll out and healthcare systems reopen.

‘Our approach through 2020 to maintain investment is already demonstrating value and I look forward to seeing further evidence of this as the recovery continues.’


Prior guidance for 2021 was reiterated with the company expecting to deliver revenue growth of between 10% and 13% and a trading profit margin between 18% and 19%.

Crucially the guidance is predicated on ‘largely unconstrained’ surgery volumes in the second half.

Shore Capital is forecasting full year revenue growth of 12% and a profit margin of 17.2%. The broker is ‘encouraged and optimistic about a stronger performance from 2Q and keen to see further evidence supportive of a faster-than-anticipated recovery.’


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Issue Date: 29 Apr 2021