Smith & Nephew plc · LSE:SN.
Smith & Nephew — Q3 2005 Earnings Presentation
17 slides from Smith & Nephew's earnings presentation, 2005
Slide 1: Financial Results Q3 2005
= smith&nephew Financial Results : Q3 2005
Slide 2: Forward looking statements
Forward looking statements This presentation contains certain "forward-looking statements" within the meaning of the US Private Securities Litigation Reform Act of 1995. In particular, statements regarding expected revenue growth and operating margins discussed under "Outlook" are forward- looking s
Slide 3: Chris O'Donnell, Chief Executive
Chris O’Donnell Chief Executive
Slide 4: Business highlights
Business highlights • Group revenue growth of 10% in tight market conditions • Fundamentals remain strong and pricing holding overall • Drivers – new products – sales force investment • Re-affirming 2005 guidance • Exit decision on DERMAGRAFT™ • BSN investment realisation • Dollar reporting from 1 J
Slide 5: Peter Hooley, Finance Director
Peter Hooley Finance Director
Slide 6: Financial highlights Q3 2005
Financial highlights Q3 2005 • Revenue growth of 10% • Margin 19.2% • EPSA growth 10% • Endoscopy manufacturing and DERMAGRAFT™ exit, restructuring and rationalisation costs in Q3 and Q4 All revenue increases are given after adjusting for the effect of translation into sterling, sales days in H1 and
Slide 7: Trading results Q3 2005
Trading results Q3 2005 Third Quarter Year to Date 2004 2005 2004 2005 £m £m £m £m Revenue 307 341 + 11% 916 1022 + 12% Trading profit 59 65½ +11% 174½ 201 + 15% Interest and finance costs - - 1 3 59 65½ 175½ 204 Taxation (17) (19½) (50½) (60½) Joint venture 4 5 11½ 12½ Attributable profit before re
Slide 8: Revenue growth 2005
Revenue growth 2005 Reported Acquisitions Currency Sales Days Underlying Quarter 3 % % % % % Orthopaedics 16 - (1) - 15 Endoscopy 9 - (1) - 8 Wound Management 4 - (1) - 3 Group 11 - (1) - 10 Year to Date Orthopaedics 18 (1) (½) ½ 17 Endoscopy 8 - (½) ½ 8 Wound Management 5 - (1½) ½ 4 Group 12 (½) (1
Slide 9: Geographic revenue growth 2005
Geographic revenue growth 2005 US Growth Europe Growth ROW Growth Total Growth Quarter 3 £m % £m % £m % £m % Orthopaedics 106 16 32 8 30 17 168 15 Endoscopy 42 5 22 10 15 14 79 8 Wound Management 20 (6) 49 3 25 9 94 3 168 10 103 6 70 14 341 10 Year to Date Orthopaedics 315 20 107 6 86 18 508 17 Endo
Slide 10: Profitability Q3 2005
Profitability Q3 2005 - - - - - - - - - Q3 - - - - - - - - - YTD Revenue Trading Profit Margin Margin £m £m % % 2005 Orthopaedics 168 37 22.0 23.3 Endoscopy 79 14 18.0 19.4 Advanced Wound Management 94 14½ 15.1 13.2 341 65½ 19.2 19.7 2004 Orthopaedics 144 32 22.2 22.7 Endoscopy 72 13 18.1 18.6 Advan
Slide 11: Cash flow
Cash flow Q3 YTD 2004 Q3 YTD 2005 £m £m Trading cash flow 82 95 Rationalisation/Macrotexture (2) (21) Operating cash flow after capex 80 74 Joint venture 6 6 Interest and tax (22) (38) Free cash flow 64 42 Dividends (29) (30) Acquisitions (78) (10) Shares 3 6 Net cash flow (40) 8 Currency 7 (41) Ope
Slide 12: Restructuring and rationalisation 2005
Restructuring and rationalisation 2005 £m Q3 Endoscopy manufacturing rationalisation 8½ Q3 DERMAGRAFT™ fixed asset impairment 15½ 24 Q4 DERMAGRAFT™ exit costs 25 49 Cash cost (mostly 2006) 33 Tax relief Q3 9 Q4 10 (Cash benefit mostly 2006) 19 12
Slide 13: 2005 guidance
2005 guidance • Targeting 17% revenue growth at Orthopaedics, 8% at Endoscopy and 5% at Advanced Wound Management • With $1.77 currency translation will be 1½% positive for the full year • Margin progression in Q4, making 20½% full year • Interest and financing costs will net to £1m positive • Tax r
Slide 14: Results in US dollars – Q3
Results in US dollars – Q3 - - - - - - - - - Q3 - - - - - - - - - - - - - - - - - - YTD - - - - - - - - - 2004 2005 2004 2005 Revenue $555m $612m +10% $1670m $1882m +13% Earnings per ADS $0.44 $0.48 +9% $1.33 $1.53 +15% Reported revenue and earnings per ADS before restructuring and rationalisation c
Slide 15: Chris O'Donnell, Chief Executive
Chris O’Donnell Chief Executive
Slide 16: Summary and outlook
Summary and outlook • Growing and expanding markets driving revenues • Orthopaedics market continues fundamentally strong • Improving growth prospects in Endoscopy • Wound Management margin uplift post DERMAGRAFT™ • New product launches taking share and expanding markets • Sales force investment del
Slide 17: We are smith&nephew
sf We are smith&nephew