Smith & Nephew Reinstates FY21 Guidance As Q1 Sales Rise On Higher Hip Implants Sales

Smith & Nephew plc SNN reinstated full-year guidance after a rise in first-quarter revenues driven by the resurgence of the U.S. hip business, offset by continued weakness in other parts of the company.
Revenue for the quarter of $1.26 billion grew 11.5% on a reported basis and 6.2% on an underlying basis, including a 3.4% boost from foreign exchange and 1.9% from acquisitions.
The first quarter orthopedic results were defined by the divergent performance of the knee and hip franchises. Knee sales fell 10.3% Y/Y, driven by a 14.9% drop in the U.S., while revenues from hips grew 9.1% globally and 11.5% in the U.S.
All three of the company's business units posted their first quarters of underlying growth since 2019.
The recovery was led by the sports medicine and advanced wound care management units, which grew year over year by 10.4% and 9.3%, respectively.
Smith & Nephew benefited from lapping the initial impact COVID-19 in 2020, as was shown most dramatically by the 21.8% jump in emerging market revenues over the pandemic-affected first few months of last year. Sales in the U.S. rose 7.1% as restrictions eased throughout the quarter.
Ex-U.S. established markets was the only geographic region to suffer a drop in sales, extending its losing streak to a fifth straight quarter.
The 1.8% decline reflected growth in Japan and Australia and the strengthening of the U.K. market, offset by a slowdown in mainland Europe as COVID-19 cases rose.
Guidance: The management reiterated guidance for the full year and expects underlying revenue growth of 10% to 13% in 2021.
It sees a trading profit margin in the range of 18.0% to 19.0%.
Price Action: SNN shares are trading 3.94% higher at $43.42 during market hours on the last check Thursday.

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