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(Alliance News) - Smith & Nephew PLC on Wednesday suffered a swing to loss in the first half of its current financial year but said it has started to see an improvement in its performance during the second quarter as lockdown restrictions have eased.
Shares in the FTSE 100 medical devices firm were trading 4.2% lower at 1,561.50 pence each on Wednesday morning in London.
Revenue for the six months ended June 27 was down 18% to USD2.04 billion - falling 30% to USD901 million in the second quarter - with the company swinging to an interim pretax loss of USD34 million from a profit of USD383 million a year ago.
Profit margin, at 8.5%, was down significantly on 21.4% a year ago, as previously guided.
"The trading profit margin reflected a number of Covid-related factors, including negative leverage effect from the fixed components of our cost base and the impact of reduced production volumes, as well as additional charges of approximately USD50 million to provisions for inventory excess and obsolescence and trade receivables," the company said.
Smith & Nephew said trading in the first half was hurt by government-led restrictions to stem the spread of Covid-19 but highlighted that its performance improved across the second quarter as elective surgeries restarted, with underlying revenue declines of 47% in April, 27% in May, and 12% in June.
Despite the loss, S&N declared an interim dividend of 14.4 cents per share, unchanged year-on-year.
Looking ahead, Chief Executive Roland Diggelmann said: "We have taken measures to ensure the Group emerges from this crisis as strongly as possible. These include maintaining our R&D investment, launching new products, protecting jobs, and managing our cost base. There remain many uncertainties as countries continue to battle Covid-19, but with our unique portfolio, proven strategy, strong balance sheet and motivated workforce we are ready to take advantage as markets recover."
As at June 27, Smith & Nephew had cash of GBP347 million.
By Ife Taiwo; ifetaiwo@alliancenews.com
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