Smith & Nephew reveals ex-Serco head Rupert Soames as chairman

Former Serco boss Rupert Soames has been announced as the next chairman of medical device maker Smith & Nephew.

He replaces Roberto Quarta, who has held the position since 2014 and is also chairman of WPP, the world’s largest advertising agency, and a partner at private equity firm Clayton, Dubilier & Rice, the owner of the Morrisons supermarket chain.

Smith & Nephew said Soames, whose grandfather was Prime Minister Sir Winston Churchill, will join as a non-executive director from April 26, subject to investor approval, before taking up the chairmanship from mid-September.

Soames, 63, stepped down as CEO of outsourcing giant Serco in late 2022 after a highly successful eight-year stint reviving a company that was on the brink of collapse before joining.

In his first year in charge, the company plummeted to an operating loss of £1.3 billion amid the fallout from multiple scandals, including overcharging taxpayers for a contract to electronically tag prisoners .

As part of a strategic turnaround, the company began cutting costs and selling several struggling divisions, such as its Indian business processing outsourcing division.

It also re-established its relationship with the British government, winning more government contracts, and expanded its reach into North America and Asia.

In 2019, the results of the strategy were evident as Serco reported its first annual revenue growth in six years and shared its first dividend payments in five years.

Business received an even bigger boost from the coronavirus pandemic as the group secured contracts to run around 20 per cent of all test sites in England and Northern Ireland and handle calls for the NHS Test and Trace programme.

Just before Soames left, Serco raised its annual profit and sales expectations due to healthy contract gains in areas such as immigration services and the impact of recent acquisitions and despite Covid-related revenue coming to an end.

Marc Owen, who helped search for chairs, said: “Rupert’s extensive track record of value creation in global companies and deep understanding of corporate governance will help [the firm] deliver on their existing plans to grow the business and improve operational performance.”

Prior to Serco, Soames was CEO of Aggreko, a power generator supplier, for more than a decade.

His appointment to Smith & Nephew follows a challenging few years for the medical technology industry due to the pandemic, supply chain challenges and inflationary pressures.

For much of 2020 and 2021, prioritization of Covid-19 patients reduced the number of elective surgeries and demand for treatments such as knee implants and ear, nose and throat surgery.

Profits and revenues recovered strongly as hospital operations returned to relatively normal, but have declined again due to a strengthening US dollar and shortages of products such as semiconductors and resin.

In its third-quarter results released in November, the group revealed that sales had fallen, in part due to weaker orders for orthopedic products and draconian lockdown restrictions in China.

Smith & Nephew Shares were 1.25 per cent lower on Friday morning at £11.42 and have lost more than a third of their value over the past three years.