China warning hits another medical equipment maker

Dow Jones2024-10-31

MW China warning hits another medical equipment maker

By Steve Goldstein

Smith & Nephew cuts margin guidance

Smith & Nephew shares slumped on Thursday as it became the second health equipment company in a week to warn that Chinese sales were getting hit hard.

Shares of medical equipment maker Smith & Nephew (UK:SN) tumbled 13% to take its year-to-date performance negative as the company slashed its earnings guidance.

Citing worse-than-expected headwinds in China, the maker of hip and knee implants now sees underlying revenue growth for the year around 4.5%, versus 5% to 6% previously.

That will translate into margins - it's now seeing "up to 50 basis points" of growth versus last year's 17.5%, versus previous guidance of at least 18%.

For 2025, it's expecting to lift its margin to between 19% and 20%, vs. a previous estimate of at least 20%.

Analysts at Citi calculated that third-quarter organic sales fell between 30% and 40% for Smith & Nephew in China. The company said organic sales rose by 4% and increased by 5.9% excluding China.

Philips $(PHG)$ this week also warned on the impact of a Chinese slowdown.

-Steve Goldstein

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

October 31, 2024 07:16 ET (11:16 GMT)

Copyright (c) 2024 Dow Jones & Company, Inc.

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