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Smith+Nephew beats estimates as elective surgeries bounce back

By Reuters

By Pushkala Aripaka

-British medical devices maker Smith+Nephew topped expectations for first-quarter sales on Thursday, buoyed by a rebound in elective surgeries and robust demand for its products.

Its London-listed shares gained as much as 4% to 1,321.5 pence in morning trade after underlying revenue rose 5.9% to $1.31 billion in the quarter ended April 2, above analysts’ median estimate for a 2.8% rise to $1.27 billion.

In December, the company laid out refreshed investment and sales plans, and targets to achieve a 4%-6% organic revenue growth by 2024, predicting an “inflection point” after the pandemic changed how companies operate.

The health crisis forced hospitals worldwide to delay elective surgeries to accommodate COVID-19 patients, curtailing demand for Smith+Nephew’s joint replacements, while supply chain issues also lingered amid the spread of coronavirus variants.

But its established markets recovered from the impact of the Omicron variant during the quarter, bringing back some demand.

Rival J&J this month said its medical devices unit should recover this year after the delays.

Founded in 1856, Smith+Nephew makes orthopaedic implants and prosthetics, along with wound dressings and other surgical technologies, which delivered a strong performance in the quarter.

In a statement, newly appointed Chief Executive Deepak Nath said the firm was on track for underlying revenue growth of 4%-5% in 2022.

The company has been improving its internal networks and taking other steps to address supply snags that have plagued all industries. Those issues have now been exacerbated by Russia’s invasion of Ukraine and subsequent sanctions on Moscow.

Smith+Nephew, however, does not source directly from Russia and has stopped new investments there, finance chief Anne-Francoise Nesmes told Reuters.

“Some of the inputs to our product raw materials, like titanium, originate from Russia, but we buy through another party and have secured enough titanium to see us into 2023,” Nesmes said.

The company is supplying essential products in Russia on humanitarian grounds. The country accounts for less than 1% of group sales.