MARKET REPORT: Smith & Nephew rocked by slowdown in China

Investors in Smith & Nephew were knee-capped after the orthopaedic firm slashed its full-year sales guidance on weaker-than-expected trading in China.

The FTSE 100-listed firm now anticipates full-year sales growth of 4.5 per cent, not 5 per cent to 6 per cent. Sales in the third-quarter were up 4 per cent – or 5.9 per cent excluding China – to £1.1billion.

It also drastically revised its full-year profit margin target for 2024. It now anticipates growth of up to 0.5 per cent for the year, not 18 per cent.

Revision: Smith & Nephew anticipates full-year sales growth of 4.5%, not 5% to 6%. Sales in the third-quarter were up 4% – or 5.9% excluding China – to £1.1bn

Beijing’s ‘value-based procurement’ programme has cut prices of surgical products without a rise in sales volumes. Smith & Nephew led the FTSE 100 fallers list, down 12.5 per cent, or 137p, at 961p.

Both main UK share indexes fell as investors digested a mixed bag of corporate news and mulled the Budget’s implications.

The FTSE 100 closed 0.6 per cent, or 49.5 points lower at 8,110, while the FTSE 250 ended down 1.5 per cent, or 305 points at 20,389.

Packaging firm DS Smith was the biggest FTSE 100 riser, leaping 14.3 per cent, or 68.1p higher, to 545.5p as its US suitor International Paper reported above-forecast third quarter results and said it expected the takeover to close early in the first quarter of 2025.

Coca-Cola HBC was up 1.6 per cent, or 42p, to 2710p as it raised its full-year outlook after a strong performance so far this year.

Anglo American rallied as BHP issued a statement to clarify that it had not officially walked away from its pursuit of its mining peer after comments made by BHP chairman Ken MacKenzie at the firm’s annual meeting earlier this week. 

Stock Watch – Oncimmune

Oncimmune is increasingly confident it will hit its annual revenue target of £6.9million, it said, backed by more high-value contracts and demand from big pharma clients.

In a trading update, the AIM-listed antibody specialist said it had added three agreements, worth £340,000 since September, building on a quarter marked by eight deals totalling £2.14million, with ‘visibility on over 40 per cent of its goal’. 

Oncimmune shares closed flat at 15.5p.

Anglo American gained 0.6 per cent, or 14.5p, to 2400p, while BHP fell 1.3 per cent, or 29p, to 2152p.

NatWest was flat at 367.7p, even as the Government sold more of its stake in the rescued lender, taking its holding below 15 per cent.

Ocado fell 0.6 per cent, or 2.10p, to 347.90p as the online grocer confirmed it was appointing former Microsoft executive Adam Warby to replace chairman Rick Haythornthwaite, who announced his resignation six months ago.

And Vodafone shed 0.5 per cent, or 0.3p, to 72p after a tentative deal with Hellenic Telecommunications to buy part of the firm’s Telekom Romania Mobile Communications wholly owned subsidiary.

Burberry rose 3 per cent, or 23.20p, to 783.4p after brokers upgraded their ratings. HSBC moved the luxury goods firm from hold to buy, while Bernstein raised Burberry from perform to outperform.

But Kainos fell 12.6 per cent, or 108p, to 747p as the IT services firm said full-year revenue would be below market consensus, with its Digital and Workday Services arms still affected by the macroeconomic environment and related delays in client decision-making.

But PPHE Hotels added 3.3 per cent, or 40p, to 1250p after the Park Plaza and Art’otel owner posted 5.1 per cent growth in third quarter revenue. 

And Synthomer rose 4.2 per cent, or 7.2p, to 180p as the polymer developer said its third quarter was in line with expectations.

Small cap AI platform operator Cordel jumped 9.4 per cent, or 0.63p, to 7.25p on news it had received a contract extension with the Australian Rail Track Corporation.