Smith & Nephew shares tumble on market slowdown fears

Smith & Nephew, the FTSE 100 manufacturer of artificial hips and knees, saw £500m wiped from its market value yesterday after revealing a slowdown in its markets and a disappointing product launch.

The company's interim results were below even the most conservative forecasts, the first "miss" since Sir Christopher O'Donnell became chief executive and reshaped the historic medical supplier in 1998.

S&N'sshares plunged 52.5p to 481p, valuing the company at £4.5bn. Sir Christopher blamed a skittish market that "will jump at shadows" and said he was "confident" of matching the City's forecasts for the full year.

He said the main factor in the missed forecasts was poor sales of a new cream for ulcers, bed sores and burns. The supplier of S&N's previous product failed regulatory inspections and had to be replaced. "The new product has some slight clinical differences, and take-up has been slow," Sir Christopher said.

Sales in the US woundcare division were down a worse-than-expected 15 per cent. However, investors were also spooked by a slowdown in S&N's largest and fastest-growing division, orthopaedics. The demand for replacement joints has surged because of the ageing population and improvements in product design, but there have been more cautious comments recently from S&N's rivals, Zimmer and Stryker. They have suggested that competition is getting tougher.

S&N shares had fallen 4 per cent earlier this week on fears that the growth of the orthopaedics market had peaked. The company said its US sales of artificial joints grew 18 per cent in the last three months, compared with 23 per cent in the first quarter, but it was still outperforming the market as a whole. It characterised the latest quarter as a "blip" and Sir Christopher said: "We can argue over whether the US market is up 12 per cent or 13 per cent, but the fundamentals haven't changed. Artificial joints is a growing market."

Overall, S&N's sales in the first half of 2004 were up 6 per cent to £609.2m, held back by the weak dollar. Pre-tax profits were 22 per cent higher at £119.4m.

Analysts are forecasting about £260m for the year as a whole and some suggested the company could now struggle to recover lost ground. "They have left themselves with a hell of a lot to do," Seb Jantet, of Investec Securities, said.

Others who met the company, though, were confident new product launches will push up the full-year numbers. Peter Cartwright, of Williams de Broe, said: "Our questioning was sceptical, maybe even hostile...but they gave sensible answers and their confidence for the second half looks plausible."

Start your day with The Independent, sign up for daily news emails
Barn owls are among species that could be affected
charity appeal
Sarah Silverman (middle) with sister Reform Rabbi Susan Silverman (right) and sister actress Laura Silverman (left) at Jerusalem's Western Wall for feminist Hanuka candle-lighting ceremony
peopleControversial comedian stages pro-equality Hanukkah lighting during a protest at Jerusalem's Wailing Wall
Arts and Entertainment
The Bach Choir has been crowned the inaugural winner of Sky Arts’ show The Great Culture Quiz
arts + ents140-year-old choir declared winner of Sky Arts' 'The Great Culture Quiz'
After another poor series in Sri Lanka, Alastair Cook claimed all players go through a lean period
cricketEoin Morgan reportedly to take over ODI captaincy
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Carlton Senior Appointments: Private Banking Manager - Intl Bank - Los Angeles

$200 - $350 per annum: Carlton Senior Appointments: Managing Producer – Office...

Carlton Senior Appointments: San Fran - Investment Advisor – Ind Advisory Firm

$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...

Sheridan Maine: Commercial Finance Manager

Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Sheridan Maine: Regulatory Reporting Accountant

Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Day In a Page

Homeless Veterans appeal: 'You look for someone who's an inspiration and try to be like them'

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Could cannabis oil reverse the effects of cancer?

Could cannabis oil reverse effects of cancer?

As a film following six patients receiving the controversial treatment is released, Kate Hilpern uncovers a very slippery issue
The Interview movie review: You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here

The Interview movie review

You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here
Serial mania has propelled podcasts into the cultural mainstream

How podcasts became mainstream

People have consumed gripping armchair investigation Serial with a relish typically reserved for box-set binges
Jesus Christ has become an unlikely pin-up for hipster marketing companies

Jesus Christ has become an unlikely pin-up

Kevin Lee Light, aka "Jesus", is the newest client of creative agency Mother while rival agency Anomaly has launched Sexy Jesus, depicting the Messiah in a series of Athena-style poses
Rosetta space mission voted most important scientific breakthrough of 2014

A memorable year for science – if not for mice

The most important scientific breakthroughs of 2014
Christmas cocktails to make you merry: From eggnog to Brown Betty and Rum Bumpo

Christmas cocktails to make you merry

Mulled wine is an essential seasonal treat. But now drinkers are rediscovering other traditional festive tipples. Angela Clutton raises a glass to Christmas cocktails
5 best activity trackers

Fitness technology: 5 best activity trackers

Up the ante in your regimen and change the habits of a lifetime with this wearable tech
Paul Scholes column: It's a little-known fact, but I have played one of the seven dwarves

Paul Scholes column

It's a little-known fact, but I have played one of the seven dwarves
Fifa's travelling circus once again steals limelight from real stars

Fifa's travelling circus once again steals limelight from real stars

Club World Cup kicked into the long grass by the continued farce surrounding Blatter, Garcia, Russia and Qatar
Frank Warren column: 2014 – boxing is back and winning new fans

Frank Warren: Boxing is back and winning new fans

2014 proves it's now one of sport's biggest hitters again
Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas