Smith & Nephew cuts sales guidance on Chinese headwinds

(Sharecast News) - Shares in Smith & Nephew tumbled on Thursday, after the medical devices firm slashed its full-year sales guidance on weaker-than-expected sales in China.

Updating on trading, the blue chip said third-quarter revenues had risen 4% to $1.4bn.

Within that, orthopaedics revenues improved by 2.3% while advanced wound management jumped 6.5%.

But growth in sports medicine and ENT, of 3.9%, was held by back by worse-than-expected headwinds in China.

Stripping out China, group revenues rose 5.9%.

Smith & Nephew therefore now expects full-year revenue growth of around 4.5%, down notably on a previous forecast for between 5% and 6%.

As at 0900 GMT, shares in the firm were down 12% at 966.8p.

Deepak Nath, chief executive, said: "We delivered encouraging growth in most segments and markets in the third quarter.

"China volume based procurement (VBP) was a significant headwind, that masked sports medicine's strong performance across the rest of the world.

"We continue to deliver on longer-term growth drivers, including robotics adoption and product innovation, as well as improving productivity.

"While the revised outlook reflects the headwinds across our surgical businesses in China, we remain convinced that our transformation to a higher growth company, with the ability to drive operating leverage through the bottom line, is on the right course."

China introduced VBP in 2019 with the intention of reducing the price of medical devices and drugs.