Cash buyback boosts Smith & Nephew shares

MEDICAL devices maker Smith & Nephew is to hand back cash to shareholders through a $300m (£193m) share repurchase programme, the firm announced as it revealed a 12 per cent drop in operating profits.

The supplier of artificial hips and knees yesterday posted first-quarter revenue of $1.075bn, against $1.079bn a year ago.

Operating profit fell to $207m, from $236 in the previous year.

The company said its outlook for 2013 was unchanged from the view which it set out with 2012 results in February.

The firm also unveiled a buyback yesterday as part of a new capital allocation that will also see a commitment to continuing investment and acquisitions.

Industry analysts had been eagerly anticipating news on the company’s plans for the use of its cash, although they were uncertain whether it would opt for a share repurchase scheme.

Chief executive Olivier Bohuon said there was scope to return surplus capital despite ongoing investment.

“We will continue to invest in our growth products, franchises and geographies and maintain adequate headroom for further significant acquisitions,” he said.

The company said it was making a small acquisition in India by buying Adler Mediequip and with it the brands and assets of Sushrut Surgicals, a maker of orthopaedic trauma products for the Indian market, for an undisclosed sum.