$44.79
-0.12 (-0.27%)
Smith & Nephew plc (ADR) (SNN)
CAPS Rating:
The Company is a global business engaged in the development, manufacture and marketing of medical devices in the sectors of orthopaedic reconstruction, orthopaedic trauma and clinical therapies, endoscopy and advanced wound management.
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Smith & Nephew develops and markets advanced medical devices for orthopedics, endoscopy, and wound management sectors worldwide. The company operates thorough its Global Business Units which include Orthopaedic Reconstruction, Orthopaedic Trauma & Clinical Therapies, Endoscopy and Advanced Wound Management. Through these business units and a separate indirect market unit the compene operates in 33 countries around the world.
The total revenues grew by 15% for the fourth quarter of the fiscal 2006 as compared to the same period in 2005. The company is a market leader in providing innovative products especially in reconstruction. The slate of new products the company introduced last year, plus the additions this year, gives it a strong platform for growth. Products like BHR and JOURNEY were only introduced halfway through the year, so it is expected to benefit for the full-year 2007.
The company is looking forward to seek value enhancing acquisitions that relate to unique or additive technologies and products and to improve its channels to market. In line with this strategy the company has recently acquired Plus Orthopedics. Plus is one of the top players in hips in Germany which is the world’s third largest orthopedics market and they also are a strong player in knees in Germany as well and their manufacturing is based both in Switzerland and in China. This acquisition is expected to strengthen the company’s distribution channels and increase leverage in its sales channels both in Europe and Asia.
Looking at the company’s market leadership in all of its business units and its strategy to break into new markets will help the company grow in a rapid pace. It is expected that this will not only make the company’s performance strong but also help the stockholders reap maximum profits out of their holdings.
Smith & Nephew PLC, Europe's biggest medical device company, in May, had agreed to buy privately owned U.S. wound treatment firm BlueSky Medical Group Inc. for a amount of $110 million. Sales from Advance Wound Management segment increased by 2% in the latest quarter. This deal will help to boost the sales of this segment in the future.
Moreover, the company’s orthopedic trauma and clinical therapies unit entered into an agreement with France-based Teknimed SA to sell that company's Spine Fix product in North America, Europe and Australia. The product is used to treat compression fractures in the spine. It has already been launched in Europe, with the company’s plans to market it in the U.S. in the third quarter of 2007. This will help in increasing the revenues for the company.
In the latest quarterly results, sales increased by 12% primarily due to increase in revenues in Trauma and Clinical Therapies by 19% and in Reconstruction by 15%. Sales increased by 15% in U.S., 8% in Europe and 11% in Asia, Africa, Australia and other America, showing increasing market share of the company in different parts of the world. Also, net profit from continuing operations went up by 7%. Quarterly results reflect the growth of company in all of its business segments.
The company has designed an Earnings Improvement Programme to continue their investment at a level which will maintain above market revenue growth rates and to drive a renewed focus on costs. With this programme, they expect trading margin to increase by an average of at least 1% each year for the next four years. Endorsing the same, coupled with an increasing focus on acquisitions and alliances, company is all set to see an interesting year in 2007.