S&N expects to grow share, announces new CEO

10th Feb 2011 07:10

David Illingworth, chief executive officer of Smith & Nephew, is to bid farewell to the company but is leaving on an optimistic note as the artificial joint specialist expects to make market share gains in most parts of the business this year. Illingworth will relinquish the role of chief executive at the next annual general meeting on 14 April, to be replaced by Olivier Bohuon, previously chief executive of Pierre Fabre and executive vice-president at Abbott Laboratories, where he was in charge of Abbott's pharmaceuticals division.His departure will raise speculation that Smith & Nephew (S&N), long touted as a takeover candidate, will become more open to being a participant in industry consolidation, though Navid Malik at Matrix Group was sceptical."The retirement of the current CEO is not a significant issue in our opinion," Malik said. "Recent M&A speculation will persists in our view and further consolidation pressures are building within the sector," Malik added.Smith & Nephew saw revenue in the final quarter of 2010 remain more or less unchanged from a year earlier at $1,066m. That brought full year revenue up to $3,962m, up 4% from $3,772m a year earlier and a shade above the $3.95bn Matrix Group was forecasting and the $3.91bn projected by Charles Stanley.The orthopaedics business unit saw a small decline in fourth quarter revenue to $584m from $593m a year earlier. "Orthopaedic Q4 revenues were down on an underlying basis by 1% to US$584m, with US sales down 1% and Europe down 4%. European markets as we suspected continue to be plagued by austerity measures," Matrix's Malik noted. Endoscopy fourth quarter revenues were virtually flat at $232m (2009: $230m) while sales of the advance wound management division rose 4% to $251m from $243m.Profit before tax jumped to $258m from $175m the year before, bringing full year profit up to $895m (2009: $670m).Earnings per share (EPS) in the final quarter of 2010 surged to 20.5 cents from 14.5 cents. Full year EPS grew to 69.3 cents from 53.4 cents. "S&N beat our and consensus estimates on EPS by a comfortable level," Matrix noted.The group trading profit margin increased by 220 basis points (i.e. 2.2 percentage points) to 26.0%, including an 830 basis points improvement in the Advanced Wound Management margin.Net debt decreased in the quarter to $492 million; at the end of the previous year it was $943m."Smith & Nephew is outperforming the market in the majority of its business segments and we have built a culture of sustainably generating efficiency gains to fund our investments for growth," claimed Illingworth.In 2011, the group expects Orthopaedic Reconstruction to grow at above the market rate, "as the momentum in our knee franchise looks set to continue." In Endoscopy Smith & Nephew expects to achieve above market growth in Arthroscopy (sports medicine), driven by the repair product segment, while sales of the Advanced Wound Management unit are also tipped to grow at above the market rate.