Under pressure Smith & Nephew to focus on efficiency

* Says full-year growth will be at lower end of 3-4 pct guidance

* CEO tight-lipped on activist investor Elliott

* Says pursuing efficiency gains rather than big deals (Recasts, adds CEO comments, analyst, shares)

By Paul Sandle

LONDON, Nov 3 (Reuters) - Smith & Nephew (Frankfurt: 502816 - news) said no major surgery is required for the artificial knee and hip maker to deliver shareholder value, even as it reported lacklustre sales that increase pressure on the company reportedly being stalked by activist investor Elliott.

Two reports last month said that Paul Singer's U.S. hedge fund had taken a stake in Smith & Nephew, reigniting perennial speculation that it could be acquired by a U.S. rival such as Stryker (Swiss: SYK.SW - news) or be broken up.

But Chief Executive Olivier Bohuon, whose plan to retire by the end of 2018 has fuelled the uncertainty, focused on fresh efforts to boost efficiency rather than any big deals.

"We are not thinking about asset disposal at this stage at all," he said after the trading update, adding that the company would concentrate on simplifying manufacturing, warehouse and distribution operations.

He remained tight-lipped when asked about Elliott.

"We do not comment on rumour or speculation and we don't comment on the identity of our investors unless required to do so under disclosure rules," he said.

The British company, which also has wound-care and sports medicine units, reported 3 percent revenue growth for the quarter, just shy of market forecasts, and nudged down its full-year guidance for revenue and trading margin growth to the lower end of its 3-4 percent and 20-70 basis point ranges.

'NOTHING STELLAR'

Berenberg analysts said the numbers were "nothing stellar" and largely in line with fairly low expectations.

Further detail on Bohuon's latest efficiency drive will be provided at the full-year results in February, he said.

Shares (Berlin: DI6.BE - news) in the company hit a record high of 14.42 pounds last month and were up 0.8 percent at 13.94 pounds at 1038 GMT on Friday.

Berenberg, which has a hold rating on the stock, said the efficiency programme is unlikely to be a game changer.

"For the last decade the company has more or less been permanently engaged in such a programme and while we do believe that on each occasion the company achieved its cost-saving goals, margins and profit growth have not lived up to investor expectations," the broker said.

Smith & Nephew made revenue of $1.15 billion in the quarter, up 3 percent, against analyst expectations of about $1.16 billion.

Bohuon said market-beating growth from its knee implants and a recovery in emerging markets helped the company to meet the lower end of its growth target in the quarter.

Recent hurricanes in the United States, Mexico and Puerto Rico had about a $5 million impact, he added.

(Editing by David Goodman)