Smith+Nephew names new CEO as it navigates supply snags, pandemic

By Pushkala Aripaka

(Reuters) -British medical products maker Smith+Nephew on Tuesday named a new chief executive to succeed Roland Diggelmann after meeting annual profit and sales forecasts.

The appointment as CEO of Deepak Nath, most recently president of the diagnostics business at Siemens Healthineers’, was “likely to come as a surprise to investors”, analysts at J.P. Morgan said.

Smith+Nephew’s London-listed shares were up 2.7% at 1,211 pence by 0939 GMT, having gained as much as 4.8%.

“(Nath) is joining us at an inflection point for the business and will bring his drive, experience and expertise to lead the team in delivering our strategy for growth at pace,” Chairman Roberto Quarta said in a statement.

Nath, who previously worked at Abbott, Amgen and McKinsey and Company, will take up his new role in April after Diggelmann steps down.

The pandemic hit soon after Diggelmann joined in late 2019, forcing hospitals to delay elective surgery to accommodate COVID-19 patients.

That hit demand for the company’s joint replacements while supply chain issues have also weighed.

Still, revenue rose 10.3% to $5.21 billion in the 12 months ended Dec. 31 on an underlying basis, in line with a median estimate $5.22 billion from analysts.

Trading profit came in at $936 million versus analysts’ median estimate of $945 million.

Smith+Nephew has been working on mitigating the hit from global supply chain issues by improving internal networks and transferring logistics to a third-party provider, finance chief Anne-Francoise Nesmes told Reuters.

“It’s not so much (a shortage of) lorry drivers for us, it’s the availability of electronic components, the availability of resin; and it’s a little bit hard to anticipate when that situation will improve,” Nesmes said.

In light of such challenges, the company is targeting more modest 2022 underlying revenue growth of 4-5%, but in line with its medium-term goals.

(Reporting by Pushkala Aripaka in Bengaluru; editing by Subhranshu Sahu and Jason Neely)