Shares in Smith & Nephew PLC (LSE:SN) fell 13% after the medical equipment manufacturer slashed its full-year revenue outlook to account for a downturn in demand and pricing pressures in the Chinese market.
The FTSE 100-listed group now expects full-year revenue growth of 4.5%, compared to 5-6% growth previously expected.
Smith & Nephew’s challenges in China were largely driven by the ongoing effects of the country’s Value-Based Procurement (VBP) programme, which has impacted pricing for surgical products without corresponding increases in sales volume.
Additionally, Orthopaedics saw lower in-market demand, slowing orders as distributors reduced their inventory levels.
Smith+Nephew has also heavily revised its full-year profit margin growth target for 2024. It now anticipates growth of up to 0.5% for the year, compared to a prior target of at least 18.0%.
Third-quarter revenue increased by 4% (or by 5.9% when excluding China) to $1.4 billion.
Chief executive Deepak Nath said: “While the revised outlook reflects the challenges we continue to face across our surgical businesses in China, we remain convinced that our transformation will position us as a higher growth company, with the ability to drive operating leverage through to the bottom line over time.”
In early trade, the shares were off 141.4p at 956.6p.