Smith & Nephew unveils cost-cutting plan in battle with activist Elliott

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”.

By | Telegraph (UK)

Image Credit: Smith & Nephew

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About Peter Coffaro 662 Articles
A growth-driven and strategic executive, Peter Coffaro commands more than 20 years of progressive management success within the orthopedic industry. Recognized by MedReps.com as one of the top medical sales influencers in the industry; he has 10 years of combined sales management experience and has held positions as a Director, General Manager and Distributor. Peter has worked for some of the top orthopedic companies in the world - Zimmer, DePuy and Stryker. He is also the founder of OrthoFeed: a popular blog that covers orthopedic news and emerging medical technologies. Peter is a three-time Hall of Fame award winner at Johnson and Johnson and has an extensive background in organizational development, business development, sales management, digital marketing and professional education. Peter holds a B.S. degree in Biology from Northern Illinois University.

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