In the 12 months ended December 31 revenues grew 2% to US$4.77bn (2016: US$4.67bn), while operating profits, which exclude the sale of the gynaecology business in 2016, jumped 16% to US$934mln (2016: US$801mln).
Emerging markets now account for 16% of sales
The FTSE 100 firm – which makes artificial hips and knees as well as wound dressings – said the solid performance was driven by “market-beating growth” in its knee implants business and double-digit growth in emerging markets.
Those gains were somewhat offset by a fall in sales in S&N’s arthroscopy and European advanced wound care businesses.
A one-off benefit from the recent US tax reforms meant the company’s tax rate for 2017 was just 17.1% (2016: 23.8%), although it expects rates to be between 20-21% going forward – that’s still better than analysts had initially estimated.
Adjusted earnings per share came in at 94.5 cents (2016: 82.6 cents0 reflecting the improved trading and lower tax rate.
Given the strong showing, Smith & Nephew increased its full-year dividend by 14% to 35 cents a share.
‘Delivering on promises’
“We delivered on our promises to improve the top and bottom line in 2017,” said chief executive Olivier Bohuon.
“Our Knee Implants franchise delivered a standout performance and we returned to double-digit growth in the Emerging Markets.
“Our healthy balance sheet, good cash generation and increased dividend demonstrate the robust foundations underpinning our business.”
2018 set to be another year of “improved performance”
He added: “In 2018 I expect Smith & Nephew to build on 2017 by delivering another year of improved performance driven by our strong product portfolio and pipeline of innovative products.”
The company expects underlying revenues to increase by another 3-4% in 2018, while trading profit margins is forecasts to improve by a further 30-70 basis points.
Smith & Nephew is also implementing an efficiency programme – Accelerating Performance and Execution – this year which it hopes will deliver cost savings of US$160mln a year by 2022.