Smith & Nephew has become the latest company to record trading being hit in China as the country’s economy struggles.
The FTSE 100 manufacturer of medical products has cut its full-year target for revenue owing to issues in China, as it faces the twin threats of weak consumer demand and difficulties with the country’s new bulk-buying procurement strategy.
The group has reduced its guidance for revenue growth from between 5 per cent and 6 per cent to 4.5 per cent, prompting its share price to decline by 12.5 per cent, or 137p, to close at 961p.
Smith & Nephew said it had recorded “slower in-market demand” for its orthopaedic products such as hip and knee implants from Chinese consumers.
The market for medical goods has also been knocked by the country’s push to create more competitive tenders for pharmaceuticals and devices through its so-called volume-based procurement programme.
The drive has reduced prices paid by cities and provinces for products and has created a headwind for Smith & Nephew. The programme was meant to deliver higher sales volumes to compensate for lower prices, but Smith & Nephew warned the volume increases were “yet to come through” and it said the issues were expected to continue into 2025.
Source: The Times
Date: 6 November