8 FEBRUARY 2018 – By
Artificial hip and knee maker Smith & Nephew has launched a major cost-cutting programme in an effort to ward off pressure to break up the firm by activist investor Elliott Advisors.
Olivier Bohuon, the outgoing boss of the FTSE 100 firm, said the plan would help deliver improved earnings after Smith & Nephew posted net profits down 3pc for 2017 to $767m (£552m), at the lower end of management guidance.
However sales edged up 2pc to $4.8bn, boosted by double digit growth in emerging markets.
The cost savings programme, called Accelerating Performance and Execution (Apex), is expected to deliver $160m worth of cost savings a year by 2022.
It involves reducing Smith & Nephew’s manufacturing base and supply chain costs, overhauling it sales strategy and collecting more data from products in use by patients in order to help justify pricing levels.
Mr. Bohuon once again declined to comment on Elliott taking a stake in the company, but said the firm did not need to be broken up.
“We are not newborn babies, we have worked on pipeline management for some time. If we have this set-up, then that’s because we are happy with it,” he said.
Smith & Nephew say their cost-cutting plan was envisaged before reports of Elliott taking a stake in the firm.
Mr. Bohuon announced plans to retire later this year in October. He said the board was continuing its “global” and “long” search to find “the best possible person to lead this great company”.
