Profits Boosted At Smith & Nephew plc

smith & nephew

The shares of Smith & Nephew (LSE: SN) (NYSE: SNN.US) increased 2% to 894p this morning after the medical technology business posted an 8% rise in underlying trading profit — beating market expectations — as demand increased for its orthopaedic reconstruction products.

Smith & Nephew, which is Europe’s largest manufacturer of artificial hips and knees, posted a pre-tax profit of $232 million for the three months ended December 31st, compared with $213 million the previous year.

These results come after an announcement from the medical giant that it will acquire AthroCare for $1.8bn in order to boost its sports medicine arm. Smith & Nephew forecast that, resulting from a strong product pipeline, its sports medicine business would deliver market beating growth this year.

The chief executive, Olivier Bohuon, commented:

“For the Full Year we generated good underlying revenue and trading profit growth and met our margin expectations. As planned we made targeted investments in research & development and the emerging markets. We also returned significant value to shareholders through increased dividends and a share buy-back programme.

“Looking to 2014, we will continue to invest where we see higher growth opportunities and focus on improving our efficiency. We built momentum across the Group through 2013 and expect to make further progress in the year ahead.”

Adjusted earnings per share added to 14p for the quarter with a final dividend of 10p. With a market cap of £7.8 billion, Smith & Nephew shares trade at 16 times earnings and offer a possible income of around 2%.

Of course, the decision to ‘buy’ — based on these ratings, today’s results and the wider prospects for the medical technologies sector — is solely your decision. 

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> Mark does not own any share mentioned in this article. The Motley Fool owns shares in Smith & Nephew.