Among a host of results from large companies which have disappointed investors - Unilever, AstraZeneca, Royal Dutch Shell for example - Smith and Nephew stands out as a success.
The artificial hip and knee maker reported better than expected figures. It said fourth quarter revenues had risen 4% to $1.1bn with a flat trading profit of $279m and a rise in margin from 19.8% in the third quarter to 25.2%, helped by cost cutting. It plans to cut 7% of its 11,000 employees worldwide over the next three years, including 220 jobs which have already gone, to save $150m a year at a total cost of $200m. Half the benefits and half the costs are expected to be achieved by the end of the current year.
The company said its performance was a good one, given the challenging market conditions but it expects the tough times to continue in 2012. Replacement hips and the like saw falling demand in the face of the global downturn, with little sign of an upturn expected until economies and job prospects improve. However it expects a modest increase in trading margin in the year. Chief executive Olivier Bohuon, who took over in April 2011, said:
We are building momentum every day and I am confident that the result will be a business that is stronger, growing faster, better balanced and fit and effective for the future.
Smith's shares have climbed 33p to 645.5p, a rise of nearly 5.5%, and Sebastien Jantet at Investec said:
Smith & Nephew has delivered a good set of fourth quarter figures. Not only were the numbers ahead of expectations, thanks to a stronger than expected margin performance, but guidance for 2012 is unchanged. We do not anticipate changing our forecasts, but see scope for a continued rerating as the market warms to the new chief executive and his strategy to drive growth.
Meanwhile James Dawson at Charles Stanley was also positive, raising his recommendation from hold to accumulate.
