Medical products firm Smith & Nephew needed an end to the pandemic and the sense of a fresh start was underlined alongside its latest full year numbers as the company announced the departure of CEO Roland Diggelmann.
The market seemed to like the news and the identity of his replacement, marking the shares higher in early trading on Tuesday despite a slight miss to analysts’ estimates on earnings and the wider market volatility linked to Ukraine.
“This probably reflects the weak share price performance under Diggelmann with the stock down more than a quarter since he started in November 2019, “said AJ Bell’s Russ Mould.
“His tenure coincided almost entirely with Covid which hit the elective procedures which help drive demand for Smith & Nephew’s hip and knee replacements. Coming out of the pandemic supply chain problems have hampered the rehabilitation process.
“The new man at the top is Deepak Nath who comes from the well-regarded but badly-named Healthineers unit within German multinational conglomerate Siemens.
“Investors will be hoping Nath can repeat the growth and margin improvements he achieved within that business at Smith & Nephew.
“He should at least enjoy a more favourable backdrop than Diggelmann faced, with strong demand expected as healthcare systems look to clear a substantial backlog of patients built up thanks to Covid.
“Nath may also look to expand beyond the company’s current focus on orthopaedics to boost areas like sports medicine and advanced wound care as well as targeting acquisitions.”