Smith & Nephew led the FTSE100 lower on a bumper day of results in the Square Mile.
Shares in the medical implant and prosthetics maker tumbled 11.4 per cent, or 137p, to 1067.5, their lowest level in seven years, as 13 blue-chip companies updated the market.
The slump came as Smith & Nephew reported a profit of £362m for the six months to July 2, down from £378m the year before, as it was hit by rising inflation. Revenues were broadly flat year-on-year at £2.1billion.
Under the microscope: Smith & Nephew shares tumbled 11.4 per cent, or 137p, to 1067.5, their lowest level in seven years
The firm was hit by rising freight and logistics costs which caused its profit margins to slip to 16.9 per cent from 17.6 per cent this time last year.
Smith & Nephew boss Deepak Nath also warned the company’s orthopaedics division was being ‘held back’ by supply chain issues.
As a result of the cost pressures, the company estimated its fully-ear profit margin would be around 17.5 per cent, down from previous estimates of 18.5 per cent. Smith & Nephew struggled during the pandemic as elective surgeries were pushed back to make room for Covid-19 patients in hospitals, causing demand for its hip and knee implants to drop.
AJ Bell investment director Russ Mould said while the company ‘should have a big backlog of business to get through’ as the pandemic subsided, it was now being held back by its supply chain problems. He added the chief executive would need to ‘sort these problems out fast’ so the company didn’t miss out on a ‘significant market opportunity.’
The FTSE 100 inched down 0.04 per cent, or 2.98 points, to 7345.25 and the FTSE250 added 1.1 per cent, or 216.1 points, to 19,855.19.
Traders were spooked by bleak US GDP data, which showed the world’s largest economy has fallen into recession, intensifying fears of a global downturn.
But the blue-chip index found some support from Shell, which rose 0.3 per cent, or 6.5p, to 2124p following strong quarterly results amid surging oil prices as Brent Crude topped $108 a barrel.
Elsewhere in the deluge of results, Anglo American became the latest miner to report a profit plunge as its half-year earnings tumbled 29 per cent to £3billion.
The firm grappled with labour shortages, cost inflation and falling demand for commodities. Despite this, the shares were up 2.5 per cent, or 69.5p, to 2844.5p.
Fellow miner Rio Tinto jumped 1.1 per cent, or 50.5p, to 4838.5p after analysts at Berenberg upped their target price on the stock to 4300p from 4100p despite reporting a fall in profit earlier this week.
Berenberg’s target price hike helped offset an opposite move from UBS, which trimmed its own price for Rio to 4300p from 4400p.
Things were less positive for industrial software group Aveva, which slipped 4.3 per cent, or 99p, to 2231p after its revenues fell in the three months to the end of June.
The firm blamed the decline on a lower number of perpetual licences for its software, which deliver revenue upfront.
Blue-chip investment manager Schroders added 6.2 per cent, or 168p, to 2898p after its assets hit a fresh high of £773bn as customers poured in more cash.
The influx of new business helped offset a drop in profits during the first half of the year to £313m from £374m in 2021.
Engineering group Weir surged 7.2 per cent, or 106.5p, to 1594p following a 20 per cent jump in half-year profits to £143m amid ‘very strong demand’ for its mining equipment and spare parts. Fellow FTSE250 firm, electronics group DiscoverIE, rose 7.9 per cent, or 54p, to 738p after first-quarter earnings were ahead of expectations.
Hammerson, the owner of the Birmingham Bullring shopping centre, bounced 8.2 per cent, or 1.77p, to 23.4p as it swung back into profit.