Smith & Nephew Q3 Profit Rises

11/6/2009 7:12 AM ET

(RTTNews) - Medical technology business Smith & Nephew Plc (SN.L: News ,SNN: News ) Friday reported higher third-quarter profit despite a decline in revenues, driven by lower costs and expenses.

The company's third-quarter attributable profit was US$ 128 million or 14.4 cents per share, compared to US$ 74 million or 8.3 cents per share last year. Profit before taxation rose to US$ 173 million from US$ 119 million in the same period last year.

The London, UK - based company's adjusted earnings per share increased 38% to 16.8 cents or 84 cents per American Depositary Share, or ADS, in the quarter.

Quarterly revenue declined to US$ 915 million from US$ 930 million in the prior-year quarter. Underlying revenue growth was 1%.

On average, four analysts polled by Thomson Reuters expected earnings of US$ 0.66 per share for the quarter on revenues of US$ 908.50 million. Analysts' estimates typically exclude one-time items.

For the preceding quarter, the company reported attributable profit of US$ 118 million or 13.3 cents per share, on revenues of US$ 926 million.

The company's third-quarter trading profit reached US$ 208 million, up from US$ 174 million in the third quarter of fiscal 2008. On an underlying basis, trading profit grew 22%.

Commenting on the results, David Illingworth, chief executive of Smith & Nephew, stated, "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."

Based on businesses, Orthopaedics, which consists of Reconstruction, Trauma and Clinical Therapies, generated revenues of US$ 503 million in the quarter, which was unchanged from last year on an underlying basis. Geographically, Orthopaedics declined 3% in Europe, while it grew 1% in the US as well as in the rest of the world.

Endoscopy revenues edged up 1% to US$ 195 million, as the strong performance of the repair segment was offset by continued weakness in capital equipment related sales. European revenue rose 9% and the rest of the world grew 13%. Meanwhile, US revenues were down 8%. Major markets such as the UK and Australia delivered double digit growth and emerging markets were again strong, the company noted.

In addition, the company's Advanced Wound Management business posted a 3% rise in revenues to US$ 217 million, reflecting the recent trend of softer market conditions. Geographically, Europe grew 8%, partly due to the growth in Negative Pressure Wound Therapy. The rest of the world revenues remained unchanged on an underlying basis, and US revenues dropped 5%, Smith & Nephew stated.