February 8, 2008 -- Europe's largest medical devices firm, Smith &Nephew - which manufactures hip implants in Birmingham - has reported full-year sales of £1.75 billion, a ten per cent increase on last year, and a trading profit up 17 per cent to £358 million.

The company yesterday reported a second interim dividend up ten per cent, adding its Earnings Improvement Programme was ahead more than one per cent during the year.

Chief executive David Illingworth said he saw the 2008 outlook as "good" and that he had "confidence" in the future.

"Smith & Nephew had a strong 2007 generating double digit revenue growth for the year," he said.

"Orthopaedic reconstruction grew 13 per cent, with good performance in the US in knees and the BHR (Birmingham Hip Replacement) System.

"Our endoscopy business grew in double digits and our clinical therapies business grew very substantially ahead of the market."

The trading margin was hit in the fourth quarter largely as a result of acquisitions made during the year, coming in 70 basis points below the same time last year.

The company also said sales at its leading reconstruction unit were up by 11 per cent to £190 million in the fourth quarter, ahead of the global market which grew at an estimated ten per cent.

Outside the US, reconstruction revenues rose by five per cent as a result of some disruption from the recall of more than 500 artificial knees, announced in November last year.

Looking ahead, the company said the revenue outlook for 2008 for both the individual businesses and for the business as a whole continued to be favourable.

"Underlying demographic trends are creating strong demand and our innovative products and customer focused approach to the market enables us to meet this demand," it said in a statement.

Charles Weston, an analyst at Nomura Code Securities, an investment bank specialising in life sciences, said: "The results are pretty good. Sales were ahead of my numbers. It looks like the margin in the reconstruction business was adversely hit by legal expenses, but it was offset elsewhere in the business."

However, he said the outlook was light on detail, which was not going to be taken well, while the share buyback programme was now going to be completed over three, rather than two years, which was disappointing.

Source: Birmingham Post