Smith & Nephew plc · LSE:SN.
Smith & Nephew — Investor Presentation (February 2019)
24 slides from Smith & Nephew's investor presentation, February 2019
Slide 1: Investor Presentation January – March 2019
Investor Presentation January – March 2019 1
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 margins, market trends and our product pipeline are forward-looking statements. Phrases such
Slide 3: Smith & Nephew
Smith & Nephew 100 FTSE100 A constituent of the UK’s FTSE100, with ADRs traded Shares S&N has a progressive dividend policy, and has Smith & Nephew is a global Medical Device on the New York Stock paid a dividend every year portfolio company, that has Exchange since 1937 been trading for over 160 ye
Slide 4: A portfolio medical device company
A portfolio medical device company ALLEVYN™ LIFE PICO™ Advanced Foam Advanced Advanced Negative Pressure Wound Dressings wound care wound devices Wound Therapy Advanced JOURNEY™ II BCS Collagenase Bi-Cruciate SANTYL™ Ointment wound Stabilised Enzymatic debrider bioactives Knees Knee System NAVIO™ Su
Slide 5: Our performance
Our performance Revenue Trading Profit Trading cash conversion $4,904m +2%* $1,123m 22.9% margin 85% 4904 1123 85% 90% 85% 1099 74% 75% 4765 1055 1048 4669 4617 4634 1020 2014 2015 2016 2017 2018 2014 2015 2016 2017 2014 2015 2016 2017 2018 Adjusted earnings per share (EPSA) Dividend per share Net D
Slide 6: New commercial model: creation of global franchises
New commercial model: creation of global franchises Old model: New model: Three generalist commercial leaders Three specialist franchise presidents 6 Specialist commercial role Generalist commercial role Executive Committee member appointed
Slide 7: FY18 revenue, $4,904m, 2% underlying, 3% reported
FY 18 revenue, $4,904m, 2% underlying, 3% reported Revenue split Product franchise growth Emerging Markets $857m Sports Medicine, Trauma & OSB 2% US Sports Medicine Joint Repair $2354m 8% Arthroscopic Enabling Tech -3% Other Established Markets Trauma & Extremities -1% $1693m Other Surgical 10% Geog
Slide 8: Q4 revenue, $1,294m, 3% underlying, 1% reported
Q4 revenue, $1,294 m, 3% underlying, 1% reported Revenue split Product franchise growth Emerging Markets $218m Sports Medicine, Trauma & OSB 3% US Sports Medicine Joint Repair 9% $649m Arthroscopic Enabling Tech -4% Other Established Markets Trauma & Extremities 1% $427m Other Surgical 11% Geographi
Slide 9: The pillars of a new, purpose-driven culture
The pillars of a new, purpose-driven culture Life Unlimited Care Collaboration Courage A culture of empathy and A culture of team, A culture of continuous learning, understanding for each other, based on mutual trust and respect innovation and accountability our customers and patients 9
Slide 10: Strategic imperatives for the company
Strategic imperatives for the company Grow Together Effectively 1 2 3 4 5 Achieve the full Transform the Expand in high- Strengthen talent Become the best potential of our business through growth segments and capabilities owner portfolio enabling technologies 10
Slide 11: APEX summary
APEX summary • Benefits of $160m p.a. by 2022 • Total one-off costs (mainly cash) up to $240m (c.150% of annualised run-rate benefits) • Period: 2018 – 2022, with around 75% of benefits and >75% of costs by 2020 • Benefits underpin medium-term margin guidance 11
Slide 12: 2019 Guidance
2019 Guidance Sales growth: Trading profit margin: Tax rate: 2019 Underlying: 2.5% to 3.5% 22.8 to 23.2% 19% to 21%(2) Reported: 1.8 to 2.8(1) Sales growth: Trading profit margin: Tax rate: Medium term Consistent growth above Ongoing improvement 19% to 21%(2) market (1) Based on the foreign exchange
Slide 13: Full year trading income statement
Full year trading income statement Full Year 2018 2017 $m $m Revenue 4,904 4,765 2% underlying growth Cost of goods sold (1,294) (1,248) Gross profit 3,610 3,517 Gross profit margin 73.6% 73.8% Selling, general and admin (2,250) (2,246) Research and development (237) (223) Trading profit 1,123 1,048
Slide 14: Full year EPSA and EPS
Full year EPSA and EPS Full Year 2018 2017 Growth $m $m Trading profit 1,123 1,048 7% Net interest payable (51) (51) Other finance costs (16) (7) Share of results from associate (6) 6 Adjusted profit before tax 1,050 996 5% 2018 tax rate: 16% Taxation on trading result (169) (170) including one-off
Slide 15: Full year cash flow
Full year cash flow Full Year 2018 2017 $m $m Trading profit 1,123 1,048 Share based payment 35 31 Depreciation and amortisation 335 320 Capital expenditure (347) (376) Movements in working capital and other (195) (83) Trading cash flow 951 940 Trading cash conversion 85% 90% Restructuring, acquisit
Slide 16: Technical guidance
Technical guidance Guidance February 2019 Foreign exchange and other revenue impact Impact of translational FX on revenue(1) -0.8% Acquisition impact on revenue +0.1% Non-trading items Restructuring costs c. $100-120m Acquisition and integration costs c. $5m European Medical Device Regulation (MDR)
Slide 17: Full Year IFRS reconciliation
Full Year IFRS reconciliation Full Year 2018 2017 Growth $m $m Trading profit 1,123 1,048 7% Trading margin 22.9% 22.0% +90bps Acquisition related costs 7 10 Restructuring and rationalisation (120) - Amortisation of acquisition intangibles (113) (140) Legal and other items (34) 16 IFRS Operating pro
Slide 18: Franchise revenue analysis
Franchise revenue analysis 2017 2018 Full Full Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Year Year Growth Growth Growth Growth Growth Growth Growth Growth Growth Revenue Growth % % % % % % % % % $m % Sports Medicine, Trauma & OSB 4 3 2 2 3 1 2 4 3 1,999 2 Sports Medicine Joint Repair 7 5 8 6 6 6 8 8 9 697 8 Arthrosco
Slide 19: Regional revenue analysis
Regional revenue analysis 2017 2018 Full Full Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Year Year Growth Growth Growth Growth Growth Growth Growth Growth Growth Revenue Growth % % % % % % % % % $m % Geographic regions US 1 2 2 1 2 (2) 1 4 3 2,354 1 Other Established Markets 1 (1) 0 (1) 0 (2) 1 (1) 0 1,693 0 Establish
Slide 20: Trading days per quarter
Trading days per quarter Q1 Q2 Q3 Q4 Full Year 2017 64 63 63 60 250 2018 63 64 63 61 251 2019 63 63 63 62 251 Year-on-year differences in the number of trading days typically impacts our surgical businesses in the Established Markets more than our wholesaler and distributor-supported businesses. We
Slide 21: Notes
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Slide 22: Notes
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Slide 23: Notes
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