Smith & Nephew reported third quarter financial results, with both revenue and trading profit up 3 percent.
Here are 10 things to know about the financial report:
1. Revenue reached $1.1 billion for the quarter, a 3 percent increase underlying and 12 percent increase on reported basis. There was accelerated performance in the sports medicine and trauma and extremities divisions, driven by recent product introductions and investment in the sales force.
2. Trading profit was $246 million, up 3 percent underlying and 10 percent on a reported basis. Trading profit margin was 21.4 percent, down 20bps.
3. The company's emerging and international market revenue was up 20 percent with improved contribution from Brazilian acquisitions $188 million cash repayment of loan and interest received after the quarter-end from Bioventus.
4. Gross revenue in established markets was flat.
5. The breakdown for the advanced surgical devices on a global scale is:
• Knee sales were up 1 percent, against a 4 percent market growth rate while the JOURNEY II Total Knee System revenue was up 3 percent.
• Sports Medicine Joint Repair was up 11 percent, benefiting from several product launches.
• Arthroscopic Enabling Technologies revenue grew 3 percent and now includes the radiofrequency Coblation portfolio acquired from ArthroCare.
• Trauma and extremities revenue was up 8 percent.
6. The company recently announced consolidating their commercial operation. All Australian offices are being consolidated into Sydney and the U.S. Wound business is being consolidated into Fort Worth. "The overall group optimization program will deliver benefits from over $120 million over a four-year period."
7. The company expects to see benefits from the consolidation program and it's new company, Syncera, over time. The company will make selective investments over time in those areas.
8. Previous guidance on the full year report is unchanged. The exchange rates have strengthened the U.S. dollar in the third quarter and if those rates continue in the fourth quarter, "we would expect a significant adverse exchange impact of minus 3 percent in Q4 on sales, which would lead to an adverse impact for the full year of minus 1 percent," according to a Seeking Alpha report.
9. CEO Olivier Bohuon discussed Syncera in the conference call reported by Seeking Alpha, addressing the two macro trends in the industry: growth potential for the emerging market and models with access to healthcare at a lower cost. "In the established market, we are addressing this in reconstructions through our Syncera offering," he said. "This quarter, I'd like to expand on how we are accelerating our development in the emerging market."
10. The company is actively seeking to expand its portfolio with sourcing in developing products. The company has research and development hubs in China, India and Dubai.