Smith & Nephew investors shrugged off warnings about the impact of coronavirus as revenues surged at the hip-and-knee replacement specialist.
Sales at the medical device group, which makes everything from bone screws to wound dressings, rose 4.8 per cent to a record £4billion, beating City estimates.
Profits, however, fell 5 per cent on the previous year to £577million as costs mounted from a string of takeovers and a restructuring that has organised it into three businesses instead of country-by-country.
Sales at hip-and-knee replacement specialist Smith & Nephew, which makes everything from bone screws to wound dressings, rose 4.8 per cent to a record £4bn, beating City estimates
Growth was especially strong in emerging markets such as China, where sales surged 30 per cent last year, and in its sports medicine division.
China accounts for 7 per cent of Smith & Nephew’s total sales, as the number of people seeking and having access to healthcare treatment rapidly expands.
But this exposure is a double-edged sword, following the outbreak of coronavirus in December.
As the country battles to contain the epidemic, it has put on hold many of the elective surgeries which use Smith & Nephew’s products. More than 2,000 people are thought to have died from the flu-like virus so far.
FTSE 100-listed Smith & Nephew, which traces its origins back to 1856, expects sales to rise by as much as 4.5 per cent next year.
But the company warned this will hinge on the worst of coronavirus passing in the second quarter of the year, between April and June.
Stock Watch – Immotion
Virtual reality entertainment group Immotion has signed deals in the past week to supply 68 of its immersive headsets to 11 sites.
Most of the orders have come from aquariums, including Sea Life Great Yarmouth and Sea Life Orlando, where users will be able to watch close-up videos of whales and sharks.
Others include a zoo in the US state of Rhode Island and a Legoland in Texas.
Shares in the AIM-listed group rose 11.2 per cent, or 0.75p, to 7.45p on the news.
The revenue rise – which was the best in ten years – managed to overshadow these warnings, with Smith & Nephew shares jumping 7.3 per cent, or 134p, to 1979p.
Other companies weren’t so lucky. Shares in IT giant Aveva, recruiter Hays and kitchen supplier Norcros all dropped as they said their operations in China would suffer.
Aveva’s stock fell 5.6 per cent, or 298p, to 4992p as it said sales in China, where it makes 5 per cent of its revenues, had fallen.
Hays, meanwhile, said it was too early to give any details about how it will affect its finances but that it was ‘materially impacting’ activity in the Chinese jobs market.
Many offices were shut until February 10 on the advice of the government, bringing hiring to a standstill. Hays shares fell 0.4 per cent, or 0.6p, to 161.7p.
Norcros saw its shares tumble 10.7 per cent, or 31p, to 260p, after it warned the slump in China will affect its supply chain and profits.
Analysts also believe retailers such as Asos (down 3 per cent, or 101p, to 3254p), B&M (down 2.4 per cent, or 9.3p, to 372.5p) and Primark, owned by Associated British Foods (down 0.4 per cent, or 10p, to 2634p) could be vulnerable.
Elsewhere, cigarette maker Imperial Brands buckled under the weight of changes to several brokers’ forecasts. The likes of Bank of America, UBS and Deutsche Bank have trimmed back their target price on the stock this month, over concerns about a crackdown on vaping in the US and questions about how sustainable its dividend is.
Its shares lost steam, falling 7.3 per cent, or 135p, to 1709p last night.
This helped drag down the wide FTSE 100, which fell 0.3 per cent, or 20.38 points, to 7436.64.
The FTSE 250, on the other hand, edged marginally up, by 0.1 per cent, or 15.83 points, to 21866.69.
Building merchant Travis Perkins was on the rise after analysts at Citigroup lifted its rating from ‘neutral’ to ‘buy’ on the hope that activity is about to pick up in the housing market.
The US brokers put a target price of 1900p, up from 1700p, on the owner of Wickes DIY stores. Shares rose 1.2 per cent, or 21p, to 1719p.
Packaging maker DS Smith bagged regulatory approval from the US Department of Justice to sell its plastics division, sending shares up 3.4 per cent, or 11.8p, to 362.7p.
Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.