Smith & Nephew withdraws guidance after Covid-19 spreads
By Sean Farrell
Date: Monday 30 Mar 2020
(Sharecast News) - Smith & Nephew has withdrawn its annual financial guidance after the spread of Covid-19 made it clear business would not return to normal as early as it expected.
In the first quarter underlying revenue growth was about 8% lower than a year earlier. Second-quarter revenue and the trading margin for the first half will be substantially down, the company said.
The medical technology company said it was too early to judge the impact on its trading after the disease spread rapidly from China. In China elective operations have restarted but are considerably below pre-outbreak levels. In Europe and the US all but the most urgent operations are being stopped.
Smith & Nephew said it was difficult to work out how long the situation would last, how quickly things would return to normal and the timing of catch-up procedures. The FTSE 100 company said it would not update its 2020 guidance until the full effect of the crisis is clearer.
Roland Diggelmann, Smith & Nephew's chief executive, said: "We remain actively engaged in our communities. We are supporting employees with healthcare experience who wish to volunteer to return to front line care and using our R&D and manufacturing expertise to support the fight against Covid-19."
"Looking beyond the immediate future, Smith & Nephew operates in attractive markets with excellent growth fundamentals. We are financially strong with a proven strategy and unique portfolio. Our major manufacturing and distribution facilities are all active and we are ready to meet pent-up demand when the time comes."
The company is cutting costs from areas such as events, travel, advertising and consultancy. It has frozen all but the most important recruitment and slowed some planned capital spending. Smith & Nephew said it had a strong balance sheet with net debt of $1.6bn, committed loan facilities of $2.9bn and $550m of senior notes that it will draw down in June.
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