"Unacceptable" sales tactics hit Smith & Nephew profits

Medical technology company Smith & Nephew posted a four per cent first quarter dip in earnings per share after discovering dubious sales tactics at unit Plus Orthopedics.

Europe's biggest medical device maker said it has launched an investigation into the "unacceptable" sales practices of the recently-acquired Greek business but did not reveal any details.

Smith & Nephew said bringing the orthopedics unit into line with the rest of the group would reduce full-year revenues by $100 million.

Chief executive David Illingworth said: "We have taken prompt, decisive action to ensure that the sales practices we uncovered within Plus in continental Europe have been stopped and this has impacted our performance this quarter and will continue to do so for the rest of the year."

Smith & Nephew bought private Swiss company Plus Orthopedics in 2007 for $889 million in a deal that doubled the company's share of the European orthopaedic reconstruction market.

In a conference call with reporters, Mr Illingworth said he could not rule out a criminal prosecution or legal action against the company's former owners.

Overall, the company described the quarter as "mixed". Revenue, including acquisitions and currency movements, increased 22 per cent to $911 million. Underlying revenue growth was two per cent.

Trading profit in the quarter was $182 million, representing reported growth of 23 per cent.

Shares in Smith & Nephew took a hammering on the news, falling 10.38 per cent to 587p by 15:00 BST on the London FTSE 100 index.