SN. Smith & Nephew Plc

--Smith & Nephew expects to deliver substantial underlying revenue growth in 2021

--The company's profit margin for this year is expected to improve from 2020

--S&N expects a return to top-line growth and to recapture momentum in 2021

By Anthony O. Goriainoff

Smith & Nephew PLC said Thursday that 2020 profit fell sharply on lower revenue, and that while it expects the impact of the coronavirus pandemic to continue into the first half of the year, it expects to deliver substantial underlying revenue growth for the year as a whole.

The FTSE 100 medical-technology company said its priorities for the year ahead are to return to top-line growth and recapture momentum, while continuing to respond to the coronavirus pandemic.

Shares at 1055 GMT were down 68.0 pence, or 4.3%, at 1,499.50 pence.

Net profit for the year ended Dec. 31 fell to $448 million from $600 million for the year earlier and a consensus of $346.9 million, taken from FactSet and based on seven analysts' forecasts.

Revenue for 2020 was $4.56 billion compared with $5.14 billion the year before and a consensus of $4.61 billion, based on the forecasts of 12 analysts polled by FactSet.

Trading profit--one of the company's preferred metrics--fell to $683 million from $1.17 billion. Trading profit margin for the year was 15%, down from 22.8% in 2019, S&N said. The company expects an improved profit margin in 2021, it said.

S&N attributed the fall to negative leverage from selling, general and administrative costs, increased R&D investment, and dilution from foreign exchange and acquisitions. This was offset by savings realized from short term mitigating actions and its efficiency programs, the company said.

The board recommended a final dividend of 23.1 cents compared with 46.2 cents in 2019, taking the total payout for the year to 37.05 cents, unchanged from 2019 and in line with its dividend policy.

"We will again invest more in R&D and I am excited by the pipeline of new technologies approaching launch, and by the potential of our recent acquisitions," Chief Executive Roland Diggelmann said.

Write to Anthony O. Goriainoff at anthony.orunagoriainoff@dowjones.com

(END) Dow Jones Newswires

February 18, 2021 06:48 ET (11:48 GMT)

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