Shares in Smith & Nephew PLC (LSE:SN) sprang 7.7% higher as the replacement hip and knee specialist reported some encouraging elements in its interim results.
Overall, the numbers for the first half ended 29 June were in line with forecasts, including revenue up 3.4% to $2.8 billion, or 4.3% on an underlying basis versus consensus forecasts of 4.2%.
The trading margin was 16.7% compared to the City consensus of 16.3%, resulting in a trading profit of $471 million, up 12.8% from a year ago and just over 2% ahead of forecasts.
Turning around its Orthopaedics arm is a key concern, with revenues up 5.8% in the second quarter, ahead of expectations, with good growth across hip and knee implants outside the US.
Net debt came in at $3.1 billion, worse than forecasts of $2.7bn –this looks to be down to working cap and timing.
An interim dividend of 14.4¢ was in line with the prior year.
The full-year outlook was unchanged, with underlying revenue growth expected in the range of 5.0% to 6.0%, and trading profit margin expected to be at least 18.0%.
CEO Deepak Nath said the results were further evidence of the progress in "transforming Smith+Nephew into a higher growth and more profitable business".
He added: "Across the majority of Orthopaedics, which was our underperforming business unit, we are now consistently achieving growth rates well above historical levels.
"The methods we employed in achieving these successes give me confidence that we will also turn around US Hip and Knee Implants and we expect to see a step up through the second half of the year."
Analysts at Panmure Liberum said from a second-quarter divisional perspective, Ortho was a "touch ahead", Sports Medicine was "in line" and AWM "a little worse".
Analysts at Stifel said: "We believe the standout part of the quarter is S&N managed to grow Ortho by 4.9% while improving cash conversion to ~60%, and driving positive free cash flow from lower WC investment, a core issue in our view."