Smith & Nephew Plc · LSE:SN.
Smith & Nephew — Smith+Nephew — Investor Presentation (June 2023)
28 slides from Smith & Nephew's investor presentation, June 2023
Slide 1: Investor Presentation April – June 2023
Investor Presentation April – June 2023
Slide 2: Forward looking statements and non-IFRS measures
Forward looking statements and non-IFRS measures This document may contain forward-looking statements that may or may not prove accurate. For example, statements regarding expected revenue growth and trading profit margins, market trends and our product pipeline are forward-looking statements. Phras
Slide 3: Our history
Our history 1914 1856 1896 Days after the outbreak of WW1, Thomas James Smith Horatio Nelson Smith we received an order to provide opened a chemist shop in Hull, entered into apartnership surgical and field dressing 1856 UK and develops a new method with his uncleforming supplies to French From 50 S
Slide 4: FTSE 100 Shares $5.2bn
100 FTSE 100 A constituent of the UK’s FTSE 100, with ADRs Shares S+N has a progressive dividend policy, and has Smith+Nephew is a traded on the New York paid a dividend every portfolio medical Stock Exchange year since 1937 technology business that has been trading for over 160 years, and operates
Slide 5: Our performance
Our performance Revenue Trading profit Trading cash conversion $5,215m +4.7%* $901m 17.3% margin 49% 5212 5215 1169 5138 1123 101% 4904 936 901 88% 85% 83% 683 4560 49% 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 Adjusted earnings per share (EPSA) Dividend per share Ne
Slide 6: A portfolio medical technology business
A portfolio medical technology business ALLEVYN◊ LIFE PICO◊ Advanced Advanced Negative Pressure Advanced Foam Wound Dressings Wound Care Wound Devices Wound Therapy JOURNEY◊ II BCS Bi-Cruciate Collagenase Advanced Stabilised SANTYL◊ Ointment Wound Knee System Enzymatic debrider Knees Bioactives ENT
Slide 7: Leading positions in attractive markets
Leading positions in attractive markets Sports Medicine Orthopaedics Advanced Wound Hip and Knee Implants Trauma and Extremities Management $5.5bn $14.7bn $12.7bn $10.7bn +4% 2022 growth rate +4% 2022 growth rate +3% 2022 growth rate +4% 2022 growth rate 2017-19 2017-19 2021 2017-19 2021 2017-19 +5%
Slide 8: Solid long-term demand drivers intact
Solid long-term demand drivers intact Prevalence Growth in lifestyle related health conditions Emerging markets Economic development driving healthcare access Lifestyle Higher levels of physical activity later in life Decentralised care Shift to outpatient settings accelerated by COVID Demographics
Slide 9: The right to win across all three franchises
The right to win across all three franchises Orthopaedics Sports Medicine & ENT Advanced Wound Mgmt. Full range across hips and knees, with Complete offering of Joint Repair, Broadest portfolio of solutions unique cementless uni knee Tower, customer service covering all key wound types Differentiate
Slide 10: Sports Medicine sustained by high cadence of innovation
Sports Medicine sustained by high cadence of innovation Sports Medicine revenue growth* Consistently above market 14.1% High cadence of new products across categories*: 7.0% 5.5% Rotator cuff HEALICOIL◊ KNOTLESS repair: Suture Anchor -11.1% 2019 2020 2021 2022 Meniscal FAST-FIX◊ FLEX Meniscal Repair
Slide 11: Step up from AWM already in place
Step up from AWM already in place AWM performance has stepped up since 2019 Below market in Moved to above previous years market in 2021 Further acceleration 11.8% potential in NPWT: 6.4% 2.2% • c.$1.7bn traditional NPWT market, S+N share <10% • New opportunity to win with RENASYS -8.1% 2019 2020 20
Slide 12: 12-point plan addressing the remaining challenges
12-point plan addressing the remaining challenges Fixing Improving Accelerating Orthopaedics productivity Sports & AWM Initiatives 1-5 Initiatives 6-10 Initiatives 11-12 Improve value and cash processes Scale Negative Pressure Wound Therapy Rewire Orthopaedics commercial delivery • Rebuild demand pl
Slide 13: Continued progress on delivery of plan
Continued progress on delivery of plan YTD actions and progress Strengthening last mile logistics: • 40% improvement in Kit Cycle Time* • >50% reduction in sets not ready for surgery Improving sales force delivery: Fixing Orthopaedics • Embedding digital management platform • Q1 launch of new incent
Slide 14: Mid-term targets
Mid-term targets • Consistent 5%+ underlying revenue growth • Above historic levels from execution of 12 point plan, and return on higher innovation investments • Trading margin of at least 20% in 2025 Mid-term • Improvements expected each year • Non-linear route, due to greater headwinds in 2023, a
Slide 15: Maintaining high cadence of launches in 2023
Maintaining high cadence of launches in 2023 Sports Medicine: Robotics: New devices for ACL reconstruction CORI Digital Tensioner • >350k US ACL procedures expected in 2023, • Adds differentiation to CORI as only ligament growing at 5.7% CAGR tensioning device that can take measurements before bone
Slide 16: Cost actions to deliver mid-term targets
Cost actions to deliver mid-term targets • Series of cost levers over three years, across manufacturing, S&M, and G&A • More than $200m in annual savings targeted by 2025 • Around half of reduction to be delivered in final year, as fixed cost and network savings build Proportion of Actions savings •
Slide 17: Q1 2023 Revenue
Q1 2023 Revenue 17
Slide 18: Q1 2023: Strong growth across franchises and regions
Franchise growth Group 6.9% Orthopaedics Q1 2023: $548m 3.9% Strong growth Sports Med & ENT $422m 10.0% across AWM 7.9% $386m Established Markets Geographical growth $1,356m, +6.9% underlying* Group 6.9% +3.8% reported US 11.8% $737m Other Established Markets 7.0% $404m Emerging Markets -7.3% $215m
Slide 19: Orthopaedics
Orthopaedics Revenue ($m) +3.9% $548m: +3.9% underlying*, $541m $548m +1.3% reported 141 -0.8% 136 20 +19.7% 23 Knees: US +10.1%, OUS -1.5% 149 +4.6% 152 Hips: US +8.5%, OUS +0.1% 231 +5.0% 237 Q1'22 Q1'23 Knees Hips Other Recon** T&E Q1 sales factors Future drivers ◊ • Ongoing Knees & Hips VBP head
Slide 20: Sports Medicine & ENT
Sports Medicine Revenue ($m) & ENT +10.0% $422m: +10.0% underlying*, $396m $422m +6.5% reported 35 45 +30.8% 141 149 +9.1% 220 +7.3% 228 Q1'22 Q1'23 SMJR AET ENT Q1 Sales factors Future drivers ◊ • Continued strong growth across both shoulder and knee repair • REGENETEN region and indication expansi
Slide 21: Advanced Wound Management
Advanced Wound Revenue ($m) Management $386m: +7.9% underlying*, +7.9% +4.7% reported $369m $386m 69 +12.9% 75 118 +15.2% 136 182 +1.0% 175 Q1'22 Q1'23 AWC AWB AWD Q1 sales factors Future drivers • AWC solid across major regions, strong prior year comparator • Ongoing focus on commercial execution a
Slide 22: 2023 outlook unchanged
2023 outlook unchanged • Targeting underlying revenue growth of 5-6%: • Continued above market growth from Sports Medicine and AWM; • Better execution and innovation delivery in Orthopaedics • Trading margin above 2022 and at least 17.5%: • Headwind from raw materials and staff cost inflation; c.100
Slide 23: Summary
Summary Growth momentum maintained in Q1 • Continued strength of Sports Medicine and AWM • Stronger performance in Orthopaedics, with ongoing improvement in commercial execution and product availability Strong elective procedure volumes at start of year • Benefit from market recovery in US and Europ
Slide 24: Appendices
Appendices 24
Slide 25: Technical guidance
Technical guidance April 2023 Foreign exchange and acquisitions Translational FX impact on revenue growth(1) c. 0.1% Acquisition impact on revenue growth - Non-trading items Restructuring costs c. $200m Acquisition and integration costs $5-10m European Medical Device Regulation (MDR) compliance cost
Slide 26: Franchise revenue analysis
Franchise revenue analysis 2022 2023 Q1 Q2 Q3 Q4 Full Year Q1 Q1 Growth Growth Growth Growth Growth Growth Revenue % % % % % % $m Orthopaedics 2.6 (1.1) 2.1 4.1 1.9 3.9 548 Knee Implants 12.2 2.7 7.4 5.5 6.8 5.0 237 Hip Implants (0.7) (3.7) (1.0) 4.9 (0.2) 4.6 152 Other Reconstruction (19.0) 10.8 (6
Slide 27: Regional revenue analysis
Regional revenue analysis 2022 2023 Q1 Q2 Q3 Q4 Full Year Q1 Q1 Growth Growth Growth Growth Growth Growth Revenue % % % % % % $m US 3.1 2.0 6.0 4.8 4.0 11.8 737 Other Established Markets(1) 5.9 0.0 0.4 7.3 3.3 7.0 404 Established Markets 4.1 1.2 3.9 5.7 3.7 10.0 1,141 Emerging Markets 14.3 0.8 8.6 1
Slide 28: Q1 consolidated revenue analysis
Q1 consolidated revenue analysis Q1 Q1 Reported Underlying Acquisitions/ Currency 2023 2022 growth growth disposals impact Consolidated revenue by franchise $m $m % % % % Orthopaedics 548 541 1.3% 3.9% - (2.6%) Knee Implants 237 231 2.3% 5.0% - (2.7%) Hip Implants 152 149 1.8% 4.6% - (2.8%) Other Re