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 461 Articles
A growth-driven and strategic executive, Peter Coffaro commands more than 20 years of progressive management success within the medical device industry. As a District Sales Manager for Stryker Orthopaedics, Peter was responsible for managing and directing a regional sales force to achieve sales and profit goals within the Rocky Mountain region. Previously, he was the Director of Sales & Marketing for Amp Orthopedics. In this role, Peter was responsible for planning, developing, and leading all sales and marketing initiatives. Peter is a former orthopedic distributor in the Pacific Northwest. He has also worked with DePuy Orthopaedics as well as Zimmer, and held positions in sales, sales training, and sales management. Peter has an extensive background in organizational development, business development, sales management, negotiating and P&L management. Peter holds a B.S. degree in Biology from Northern Illinois University.

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