(Reuters) -Smith+Nephew’s turnaround plan helped the medical products maker beat first-half profit estimates on Tuesday, and prompted it to launch a $500-million share buyback programme for the second half, sending its shares more than 15% higher.
The British company, which makes orthopaedic implants, wound dressings and other surgical aids, has been cutting costs and launching products amid a recovery in its biggest market, the United States, offseting weaker demand in China.
Its businesses grew faster in the second quarter than in the first. Underlying revenues rose 5% at its orthopaedics business, 5.7% at its sports medicine and ear, nose and throat business and 10.2% in wound management.
“The operational improvements we have made under the 12-Point Plan are increasingly translating into better financial performance,” CEO Deepak Nath said.
Smith+Nephew shares were up 15.3% at 0810 GMT, the biggest percentage rise on Britain’s blue-chip index and headed for their best day since March 2020.
The company is benefiting from an increase in consumers taking more elective surgeries across key markets, excluding China, where weaker demand and a bulk-buying programme is weighing on its margins and volumes.
Smith+Nephew maintained its full-year outlook and forecast higher margin growth in the second half of the year. It continues to expect an impact of $15 million to $20 million from tariffs.
The bulk of that impact is expected in the second half, finance chief John Rogers said on an analyst call.
Jefferies analysts welcomed the buyback plan, adding that Smith+Nephew “seems like a relative safe haven,” thanks to its limited exposure to economic headwinds and “appealing valuation”.
Smith+Nephew said last November it was on the right course after a report that three major investors were pushing for a break-up of the company.
It posted a trading profit on Tuesday of $523 million for the six months to June 28, beating analysts’ average estimate of $496 million, according to a company-compiled poll. Revenue of $2.96 billion was also above expectations of $2.93 billion.
(Reporting by Unnamalai L and Pushkala Aripaka in Bengaluru; Editing by Sherry Jacob-Phillips and Mark Potter)
