Smith & Nephew PLC (LSE:SN) shares shot up 8.5% after the replacement hip and knee specialist said its transformation plan should kick in this year, despite ongoing woes in China after improving trading over the last year.
Revenue climbed 4.7% to US$5.8 billion in the year to December 31, the medical equipment maker said Tuesday, aiding an 8.2% increase in trading profit to US$1.1 billion.
Trading margin widened from 17.5% to 18.1% in the meantime, with Smith & Nephew forecasting a further “step-up” ahead on chief executive Deepak Nath’s turnaround plan.
Trading profit margin should sit at 19.0% to 20.0% in the year ahead, the company said, as revenue climbed by 4.8%.
“We have made solid progress fixing the foundations,” Nath commented, “this will be the year when transformation starts to unlock substantial value for our shareholders”.
Smith & Nephew has come under pressure from activist investor Cevian and warned on profit last time out.
Turnaround efforts have centred around productivity improvements and rebuilding momentum in the likes of its hip and knee implants, as well as robotics and trauma wings.
The fourth quarter, when revenue grew 7.8% to US$1.6 billion, marked a “strong end” to the year, it said, despite “sector-wide headwinds,” including in China, where improvement was expected in late 2025.
Shares in the FTSE 100 group rose 89p to 1,132.5p in the first hour of trading on Tuesday.
Analysts at Panmure Liberum said the results held "no nasty surprises", which was "a relief given the track record" and that was behind the bounce in the shares.