Smith & Nephew ups sales guidance again as boss stands down
Hip and knee replacement specialist Smith & Nephew has upped its sales outlook for the second quarter in a row as its boss bows out amid a dispute over pay.
Chief executive Namal Nawana is stepping down later on Thursday after less than 18 months at the helm, having announced the move last week after the firm was reportedly unable to meet his demands.
He will remain with the company until the end of the year to help with the handover.
His successor Roland Diggelmann – the former boss of Roche Diagnostics – takes over on Friday, inheriting a business with a rosy outlook.
In its third quarter update, Smith & Nephew said underlying revenues for the full-year are expected to rise by 3.5% to 4.5%.
But it warned that trading profit margins are expected at around 22.8% – at the lower end of its previous guidance – due to investment plans and an impact from foreign exchange movements.
Shares were 1% lower.
The sales cheer comes after revenues rose 6.5%, or 4% underlying, in the three months to September 28, boosted by a strong performance in its orthopaedics and sports medicine divisions.
Its orthopaedics arm, which includes hip and knee implants, saw 3.4% revenue growth, while sports medicine notched up 6.9% growth.
In an improvement on the second quarter, the advanced wound management business delivered a 2.1% rise in revenues.
Mr Nawana did not comment as the results were unveiled, although chief financial officer Graham Baker said the figures showed a “further step towards growing at or above our markets”.
He added: “We’ve built momentum across the first nine months of the year and, at the same time, continued to invest behind our commercial teams and acquisitions to support sustained success over the medium term.
“As a result, we’re confident to increase 2019 revenue guidance again.”
News of Mr Nawana’s departure sparked a share slide last Monday, coming so soon after he took the top job in May 2018.
It followed reports that Smith & Nephew was mulling plans to move its share listing to the US to partly escape the UK’s stricter attitude towards pay for executives.
In June, it was said that the company wanted to narrow the gap between Mr Nawana’s pay at former company Alere and his role at Smith & Nephew.