Medical device maker Smith & Nephew outlined its new ‘strategy for growth’ on Thursday, targeting consistent 4% to 6% organic revenue growth by 2024, “structurally ahead” of historic levels, as it made a new commitment to return up to $300m of capital to shareholders.
The FTSE 100 company said it was looking to rebuild its trading margin, targeting at least 21% by 2024, with further improvements thereafter.
Part of the new strategy involved changes to its capital allocation priorities, with the firm saying it would maintain higher investment in innovation to drive organic growth.
Smith & Nephew said it would continue acquiring new technologies, and expanding in higher growth segments that had a “strong strategic fit” and met its financial criteria.
The board would maintain its progressive dividend policy and investment-grade credit metrics, while the company made a new commitment to return surplus capital to shareholders through a regular annual share buyback, expected to be in the range of $250m to $300m in 2022.
On the productivity and commercial front, Smith & Nephew said it would continue delivering its current manufacturing and supply optimisation programmes, and sustain the recent, “strong” profitable growth in advanced wound management and sports medicine, which represented 60% of its portfolio.
The company also wanted to re-establish momentum and growth in its orthopaedics sector.
“Smith & Nephew is at an inflection point, with a clear ambition and strategy for growth,” said chief executive officer Roland Diggelmann.
“We are transforming to a sustainably higher growth company with innovation at its core, building on our strong portfolio and pipeline of new technologies, and underpinned by improving productivity and commercial execution.
“With financial discipline we will continue to invest in the business to take advantage of the opportunities we see, while also driving shareholder returns.”
At 1224 GMT, shares in Smith & Nephew were up 2% at 1,227.5p.
