Smith & Nephew Plc · LSE:SN.
Smith & Nephew — H1 2001 Earnings Presentation
33 slides from Smith & Nephew's earnings presentation, 2001
Slide 1: Smith & Nephew: First Choice in Medical Devices
Smiths-Nephew First Choice in Medical Devices
Slide 2: Smith & Nephew plc 2001 Interim Results
Smith & Nephew plc 2001 Interim Results Chris O’Donnell - Chief Executive
Slide 3: Developing momentum
Developing momentum • Focus on global medical devices delivering value • Market dynamics favourable • Strong H1 sales and profit performance • Accelerating sales growth plus margin expansion • Group restructuring complete • Investing in products, sales forces and acquisitions for the future • Re-ent
Slide 4: Trading highlights
Trading highlights • Underlying sales increase 12% (8% H1 2000) • Margins have improved to 17% ongoing • Profit before tax increased 25% ongoing • EPS up 9% - equivalent to 14% underlying
Slide 5: Peter Hooley, Finance Director
Peter Hooley Finance Director
Slide 6: Trading results
Trading results 2000 2001 Sales £m £m Ongoing 404 489 +21% Divested 188 59 £592m £548m -8% Profit before exceptionals £m £m Ongoing 66 83 +25% Divested 26 5 Joint Venture - 4 92 92 Interest (1) (10) £91m £82m -10% Shares in Issue 1118m 921m EPS before exceptionals 5.72p 6.26p +9% Dividend 1.70p 1.75
Slide 7: Sales growth
Sales growth Underlying Acquisitions Currency Reported % % % % Orthopaedics 16 - 5 21 Endoscopy 10 2 6 18 Advanced Wound Management 13 14 1 28 Rehabilitation 4 - 4 8 12 4 5 21
Slide 8: Operating margins
Operating margins 2000 2001 % % Ongoing 16.4 16.9 Divested 13.7 8.3 15.5 16.0 Previous half year 14.6 15.5 Transactional currency (0.3) (1.0) Divestment effects - 0.3 Underlying improvement 1.2 1.2 15.5 16.0
Slide 9: Cash flow
Cash flow 2000 2001 £m £m Ongoing 50 47 Divested 24 3 Rationalisation and integration (6) (12) Acquisition working capital (1) (6) Operating cash flow 67 32 Interest, tax and dividend (67) (69) Disposals less acquisitions 154 2 Net cash flow 154 (35) Currency (30) (27) Opening cash/(debt) 22 (236) C
Slide 10: Chris O’Donnell, Chief Executive
Chris O’Donnell Chief Executive
Slide 11: New shape of Smith & Nephew: Four global business units
New shape of Smith & Nephew Four global business units Businesses Geography Africa, Asia Advanced & Australasia America Wound £67m £281m Management Orthopaedics £132m £196m 14% 27% 40% 57% 29% 8% Europe Rehabilitation UK 25% £141m £38m 9% Endoscopy £123m
Slide 12: Factors driving our growth
Factors driving our growth • Strong market dynamics • Major products in strong growth phases • New products • Sales force expansion • Efficient organisation • Augmenting acquisitions
Slide 13: Strong market dynamics
Strong market dynamics • Overall market growth increasing - orthopaedics into double digits • Favourable long term demographics • Proportion of over 65s to working population will increase 50% in next 25 years • More active lifestyles / quality of life improvement • Pricing trend moderately positive
Slide 14: Major products in strong growth phases
Major products in strong growth phases (H1 Sales Growth) • Synergy hips + 49% • Genesis knees + 17% • TriGen nails + 336% • Dyonics shavers and blades + 10% • Arthroscopy soft tissue repair + 13% • Allevyn wound dressings + 25% • Collagenase wound debrider + 34%
Slide 15: New products 2001
New products 2001 Q1 Q2 Q3 Q4 Reflection Roughcoat Supartz (FDA approved) Synergy HA/Porous TriGen Locking Screw hip cup Intramedullary Hip Screw TriGen Trochanteric Jet-X external fixator New arthroscopy Enhanced shoulder line Minimally invasive Uni Improved Allevyn Oxidised Zirconium Knee Knee Adh
Slide 16: Further sales force expansion
Further sales force expansion (Growth on end 2000) H1 Orthopaedics +11% Endoscopy + 8% Wound Management +11% Rehabilitation +25% Indirect markets + 5% Total + 9%
Slide 17: Efficient organisation
Efficient organisation 1999 2000 2001 Group Group Ongoing Annualised Manufacturing locations 30 26 10 Employees 11,213 10,435 6,854 Sales per employee (£) 99,875 108,740 142,690 Profit per employee (£) 14,938 17,096 24,161
Slide 18: Augmenting acquisitions
Augmenting acquisitions • OBL tissue repair • Increases penetration of shoulder arthroscopy • Collagenase wound debrider • Additional European sales capture – Spain & Italy • Acticoat burns dressing • Patented nanocrystalline silver-based wound dressing • Expansion into chronic wounds/global roll-ou
Slide 19: Summary - real momentum
Summary - real momentum • Continuing strong market dynamics • Three major GBUs accelerating performance • Rehabilitation transformation underway • Group sales and financial targets being exceeded • Continuing confidence in aim of achieving underlying mid-teens EPS growth from 2002
Slide 20: Endoscopy Business Focus
Endoscopy Business Focus Ron Sparks President, Endoscopy Division
Slide 21: Endoscopy - The Market
Endoscopy - The Market • Sinus • Laryngeal • Instability Repair • Rotator Cuff Repair • Lung Lobectomy • Mini CABG • Spinal Discectomy • Cholecystectomy • Colon Resection • Nephrectomy • Gastroscopy • Foreign Body Removal - Hip • TURP • Carpal Tunnel Release • Trigger Finger • Meniscal Repair and Re
Slide 22: Endoscopy market opportunity
Endoscopy market opportunity • Smith & Nephew is becoming a S&N Storz Stryker leading player in the endoscopy BSC 7% 6% 4% markets by: 9% Medtronic 4% Linvatec • Extending its leading share position in Tyco 4% Arthroscopy (30% global share) with new 10% techniques and products. Guidant • Expanding b
Slide 23: Significant H1 achievements
Significant H1 achievements • Accelerating sales growth • Success in repair market • New products • Digital OR momentum
Slide 24: H1 results - strong growth
H1 results - strong growth Sales H1 2001 vs. prior year 25% % Growth 20% 2001 vs. 2000 15% 10% 5% 12% 8% 22% 0% Global US Int'l
Slide 25: Success in repair market
Success in repair market • OBL integration • Successful product and technology integration. • Providing immediate share increase in shoulder/hips/small joint marketplace -- the fastest growing arthroscopy segments.
Slide 26: New product - Meniscal repair
New product - Meniscal repair • FasT-Fix™ Meniscal repair system • World’s first easy-to-use suture-based implant. • Launched April 2001. • Target market size > $30 million. • $500,000 in sales first 2 months. • 2nd half projected sales $3 million. • Enhances strong knee repair market position.
Slide 27: New product - Success in venous endoscopy
New product - Success in venous endoscopy • TriVex™ System for Varicose Vein resection • World’s first minimally invasive treatment for varicose vein removal. • 300 physicians trained in 1st half 2001 (600 since launch). • Nearly $2 million sales for first half 2001. • Project over $6 million total
Slide 28: New product - Arthroscopic Radiofrequency system
New product - Arthroscopic Radiofrequency system • Dyonics® Control RF • Global release July 16, 2001. • World’s first RF System: • With single-use handpiece • To adapt the energy output of a hospital's standard electrosurgical generator. • Global RF market of $114 million. • Project $10 million in
Slide 29: New product - Digital output camera
New product - Digital output camera • Dyonics® Vision 325Z DV Camera System with Digital Output • First high-performance endoscopic camera with digital output for the global market. • Launched June 2001. • Real-time video output part of foundation for Digital OR. • Target market size >$150 million.
Slide 30: Future paradigm of technologies
Future paradigm of technologies Access Visualization Digital OR Non- Less-invasive invasive technologies technologies Resection Thermal energy Repair Biological Repair Integration - Miniaturization - Repair - Wireless - Radiofrequency
Slide 31: Digital OR: Innovation in progress H2
Digital OR Innovation in progress H2 • Dyonics® Vision 635 Digital OR capture system • Current image capture market of >$15 million – growing rapidly. • Shipments of over 30,000 digital capture systems are projected in the US for the next three years. • Dyonics® Vision 111 Camera system • World’s fi
Slide 32: Key initiatives - 2001/2
Key initiatives - 2001/2 • Sales force development/expansion • 10% expansion projected for 2001. • Planned for 30% for major international markets 2001-02. • New world-class facilities • Mansfield and Andover manufacturing expansion. • Expanding Portfolio • Very strong new product pipeline. • Improv
Slide 33: Smith & Nephew: First Choice in Medical Devices
Smiths-Nephew First Choice in Medical Devices