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S&N revenue beats market expectations

HIP and knee replacement specialists Smith & Nephew (S&N) saw income for the first quarter of the year climb to $995m (£660m), putting the group’s financial performance ahead of the group’s outlook.

The growth in revenue represents a nine per cent boost on the same period last year when revenue came to $865m, with further expectations that S&N could be in a key position to benefit from the UK’s ageing demographic and the population’s move to a more active lifestyle.

Chief executive David Illingworth said the group’s core trading profit margin has improved alongside revenue numbers, which he said, meant that positive momentum in S&N’s business continued, with the group making good progress in all areas.

S&N said its trading profit margin soared by more than 25 per cent, while profits came to $250m up from $183m it posted during the same period in 2009.

Analysts expect further growth from the medical expert, with some describing S&N as a world leader.

“We believe the long-term outlook for the group is positive. Its markets are expected to generate mid-single digit volume growth, driven by ageing demographics, more-active lifestyles, the increase of diseases, such as obesity and diabetes, and growth in emerging markets,” said Jonathan Jackson, head of equities at Killik & Co.

Orthopaedics, advanced wound management and endoscopy, S&N’s three main business areas, saw revenue rise during the period ending 3 April.

The group’s orthopaedics business, which covers joint replacement technology, grew by six per cent during the first quarter, with the hip franchise up by six per cent and the knee franchise up by nine per cent.

Meanwhile, S&N’s endoscopy business, which covers surgical technology, was up by 15 per cent and its advance wound management was up by 11 per cent.

Despite reporting strong first quarter revenue figures, the group warned that the current environment was still not without challenges.

Illingworth said the company was still on the right track for the rest of the year.