Smith & Nephew PLC (LSE:SN) reported flat annual revenue but declining margins meant operating profit fell sharply.
The global medical technology company said operating profit margins slipped to 8.6% from 11.4%, reflecting higher inflation in freight and logistics, the impact of China VBP (volume-based procurement), as well as sales and marketing expenditure levels returning to more normal levels.
As a result, while revenue for the year to 31 December 2022 was little changed at US$5.2bn, operating profits fell to US$450mln from US$593mln.
Earnings per share were 25.5c, more than halved from 2021’s 59.8c, and the firm left the full-year dividend unchanged at 37.5c.
Smith & Nephew reported good early progress in delivering its 12-point plan launched last year.
It hopes to improve execution focused on fixing Orthopaedics, improving productivity and accelerating growth in Advanced Wound Management and Sports Medicine.
Looking ahead, Smith & Nephew forecast underlying revenue growth in the range of 5.0% to 6.0% and trading profit margin of least 17.5% (2022 17.3%).
In the medium term, it is targeting 5%+ underlying revenue growth driven by return on innovation investments and execution of its 12-point plan and trading profit margin expansion to at least 20% in 2025 driven by productivity improvements.
The company said Rupert Soames OBE will succeed Roberto Quarta as chair.