TOP NEWS: Smith & Nephew Posts 2020 Profit Drop But Maintains Dividend

(Alliance News) - Smith & Nephew PLC on Monday posted a fall in annual earnings, blaming the ...

Alliance News 18 February, 2021 | 8:32AM
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(Alliance News) - Smith & Nephew PLC on Monday posted a fall in annual earnings, blaming the deterioration on the Covid-19 pandemic, which caused elective surgical procedures to be put on hold.

Shares in the FTSE 100 medical devices manufacturer were trading 7.8% lower at 1,446.00 pence each on Thursday morning in London

For 2020, Smith & Nephew posted trading profit of USD683 million, almost halved from the USD1.17 billion recorded for 2019. This was as revenue fell 11% to USD4.56 billion from USD5.14 billion. Pretax profit was GBP246 million, down 67% from GBP743 million.

The company said trading profit margin of 15% reflected lower gross margins, negative leverage from selling, general & administrative costs, and increased R&D investment. Operating profit margin of 6.5% included restructuring costs.

Selling, general and administrative expenses for 2020 was USD2.56 billion, down 4.8% from USD2.69 billion in 2019. Research and development expenses were up 5.1% at USD307 million from USD292 million.

"Trading across the year was impacted, with the second quarter being particularly badly affected as healthcare systems shut down elective procedures to focus on providing treatment to Covid-19 patients," the Hertfordshire-based company said.

Revenue for the fourth quarter was down 5.7% at USD1.33 billion from USD1.41 billion

S&N declared a full-year dividend of 37.5 US cents per share, unchanged from 2019, reflecting "confidence in the business and strength of the balance sheet".

Looking ahead to 2021, Smith & Nephew said the outlook reflects the likely continuation of Covid-19 effects during the first half of 2021 and the uncertainty regarding the timing and pace of recovery.

"We start 2021 with three clear priorities: to return to top-line growth and recapture momentum; to drive further operational improvement; and to continue to respond effectively to COVID-19. We will build on the progress we are starting to make in areas where we have recently invested and introduced innovation. We will again invest more in R&D and I am excited by the pipeline of new technologies approaching launch, and by the potential of our recent acquisitions," said Chief Executive Officer Roland Diggelmann.

By Ife Taiwo; ifetaiwo@alliancenews.com

Copyright 2021 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
Smith & Nephew PLC 1,391.00 GBX -0.61

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