Smith & Nephew Plc · LSE:SN.
Smith & Nephew — FY2016 Earnings Presentation
30 slides from Smith & Nephew's earnings presentation, March 2017
Slide 1: Investor Presentation January – March 2017
Investor Presentation January – March 2017
Slide 2: Forward looking statements
Forward looking statements 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 as “aim”, “plan”, “i
Slide 3: About Smith & Nephew
About Smith & Nephew 100 Smith & Nephew is a diversified advanced medical technology FTSE100 A constituent of the UK’s Shares S&N has paid a dividend to FTSE100, our shares are traded shareholders on its Ordinary business that supports in London and New York. Shares every year since 1937. healthcare
Slide 4: Today: a company of pioneers for over 150 years
Smith & Nephew is a company of pioneers, extending access to advanced medical technologies and enabling better outcomes for patients globally. We’ve been doing this for over 150 years. 50 1896 1914 1856 days after the outbreak of WW1, FROM Thomas James Smith Horatio Nelson Smith entered we received
Slide 5: Our business
Our business PICO™ Negative Pressure Wound Therapy ALLEVYN™ Life Advanced Foam Wound Dressings Advanced Wound Collagenase Advanced Wound Devices JOURNEY™ II BCS SANTYL™ Ointment Care Bi-Cruciate Enzymatic debrider Stabilised Knees Knee System Advanced Wound Bioactives NAVIO™ Surgical System Other Su
Slide 6: Our markets…
Our markets… We have a balanced global footprint… 15,000 Employees
Slide 7: Our leading position
Our leading position Zimmer Arthrex Zimmer Biomet Other Convatec Other Biomet 30% 3% 37% 8% 15% 35% DePuy Mitek** Acelity 15% 21% Stryker Advanced 19% Hip & Knee Sports Wound Implants Medicine* Linvatec 5% Management Other Molnlycke 13% 12% DePuy Stryker Coloplast Synthes** 11% 4% 21% 10% 23% 18% Da
Slide 8: Our market growth drivers
Our market growth drivers Emerging Markets Demographics Technology Prevalence Economics Lifestyle 8
Slide 9: Market realities and opportunities
Market realities and opportunities Procedure demand Still room for Ability to pay continues New business models Environment continues to increase innovation to decrease in slowly emerging, Complexities established markets but fragmented Demographic Fuelled by Demonstrate Austerity, Alternative, Sync
Slide 10: Our performance
Our performance Revenue Trading profit Trading cash conversion $4,669m +2%* $1,020m -4%* 21.8% margin 75% 4,669 104% 4617 4,634 1099 87% 89% 85% 1055 74% 75% 4,351 1020 4,270 987 4,137 961 965 2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016 Adjusted earnings
Slide 11: Our customers
Our customers Nurses, Nurse specialists Healthcare systems, Retail consumers, Procurement groups Patients Payers, Administrators Surgeons Physicians, GPs 11
Slide 12: Strategic priorities
Strategic priorities Winning Accelerating Innovating Simplifying Supplement in Established development in for value and improving organic Markets Emerging Markets our operating growth through model acquisitions 12
Slide 13: Capital allocation framework
Capital allocation framework 1 Reinvest for 2 Progressive 3 Acquisitions in 4 Return excess organic growth dividend policy line with strategy To shareholders Maintain strong balance sheet to ensure solid investment grade credit metrics 13
Slide 14: Future – a rebalanced Smith & Nephew
Future – a rebalanced Smith & Nephew 2011* Future Lower Higher Growth Growth 65% 65% Improving Strengthening Creating Higher Lower Growth Growth 35% 35% Proportion of Revenue * Excluding Clinical Therapies Higher Growth: Sports Medicine Joint Repair, Trauma & Extremities, Advanced Wound Bioactives a
Slide 15: Q4 revenue growth of -1% underlying
Q4 revenue growth of -1% underlying* Geographical growth Revenue split Product franchise growth Sports Medicine 5% Joint Repair Arthroscopic 0% Enabling Tech -3% US Trauma & -4% Extremities Other Surgical 15% Knees 0% -3% Est OUS Hips -6% -3% AWC 1% Emerging AWB 2% 3% AWD -5% 0% 5% -10% 0% 10% Under
Slide 16: Full Year 2016 revenue growth of 2% underlying
Full Year 2016 revenue growth of 2% underlying Geographical growth Revenue split Product franchise growth Sports Medicine 8% Joint Repair Arthroscopic Enabling Tech 3% US 2% Trauma & Extremities -4% Other Surgical 15% Knees 4% 0% Est OUS Hips -1% -3% AWC 0% 0% Emerging AWB 5% AWD 0% 5% 10% -5% 5% 15
Slide 17: Our 2017 guidance and medium-term outlook
Our 2017 guidance and medium-term outlook Sales growth: Trading profit margin: Tax rate(2): 2017 Reported(1): 1.2% to 2.2% 20-70bp improvement Around 26% Underlying: 3% to 4% Underlying sales growth: Trading profit margin: Cash: Medium - Consistent growth above Ongoing improvement Releasing cash to
Slide 18: 2011-2016: our journey here
2011-2016: our journey here We invested in our growth platforms We simplified the Group structure and our infrastructure and invested in talent • Stepped up R&D investment • Streamlined from four independent silos to a Organic • Built our presence in Emerging single group structure investments Marke
Slide 19: 2017 – 2018: driving improved execution
2017 – 2018: driving improved execution A structure fit to implement Tools to execute better Ongoing improvement our strategy programmes • Organisational structure is • Improve salesforce excellence • Research & Development fully in place • Drive better pricing • Strengthening supply chain • Commerc
Slide 20: Innovation remains at the heart of Smith & Nephew
Innovation remains at the heart of Smith & Nephew Driving innovation Strong product lines Global R&D function • JOURNEY◊ II Knee System • REDAPT Revision Hip System • Single group R&D strategy with focused organisation • NAVIO◊ Surgical System • Prioritisation and harmonisation of • Our comprehensiv
Slide 21: A stronger Smith & Nephew
A stronger Smith & Nephew • iple growth drivers A fundamentally …in a unique, strong, …with multiple drivers transformed Group… global position… of higher growth • Sports Medicine leadership • Innovative Knee portfolio including robotics • PICO changing the NPWT landscape • Emerging Markets • M&A op
Slide 22: Appendices
Appendices >t smith&nephew 22
Slide 23: Franchise revenue analysis
Franchise revenue analysis 2015 2016 Full Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Full Year Year Growth Growth Growth Growth Growth Growth Growth Growth Growth Revenue Growth % % % % % % % % % $m % Sports Medicine, Trauma & 5 4 2 5 4 5 4 4 1 1,907 3 OSB Sports Medicine Joint Repair 9 7 4 9 7 11 10 8 5 587 8 Arthros
Slide 24: Regional revenue analysis
Regional revenue analysis 2015 2016 Full Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Full Year Year Growth Growth Growth Growth Growth Growth Growth Growth Growth Revenue Growth % % % % % % % % % $m % Geographic regions US 1 4 4 9 5 8 4 2 - 2,299 3 Other Established Markets (2) 3 1 2 1 4 1 - (3) 1,679 - Established Mar
Slide 25: Trading income statement - half and full year
Trading income statement - half and full year H1 H2 Full Year 2016 2015 2016 2015 2016 2015 $m $m $m $m $m $m Revenue 2,328 2,272 2,341 2,362 4,669 4,634 Cost of goods sold (632) (566) (640) (577) (1272) (1,143) Gross profit 1,696 1,706 1,701 1,785 3,397 3,491 Gross profit margin 72.8% 75.1% 72.7% 7
Slide 26: EPSA and EPS – half and full year
EPSA and EPS – half and full year H1 H2 Full Year 2016 2015 2016 2015 2016 2015 $m $m $m $m $m $m Trading profit 483 512 537 587 1,020 1,099 Net interest payable (24) (21) (22) (20) (46) (41) Other finance costs (6) (7) (5) (6) (11) (13) Share of results from associate - (3) 2 (2) 2 (5) Adjusted pro
Slide 27: Free cash flow – half and full year
Free cash flow – half and full year H1 H2 Full Year 2016 2015 2016 2015 2016 2015 $m $m $m $m $m $m Trading profit 483 512 537 587 1,020 1,099 Share based payment 14 13 13 16 27 29 Depreciation and amortisation 147 148 153 159 300 307 Capital expenditure (174) (161) (218) (197) (392) (358) Movements
Slide 28: Management
Management Olivier Bohuon Chief Executive Officer Olivier joined the Board and was appointed Chief Executive Officer in April 2011. Olivier has had extensive international experience within a number of pharmaceutical and healthcare companies. Prior to joining Smith & Nephew, he was President of Abbo
Slide 29: Investor Relations Contacts
Investor Relations Contacts Ingeborg Øie Kate Gibbon VP, Investor Relations Investor Relations Manager E: ingeborg.oie@smith-nephew.com E: kate.gibbon@smith-nephew.com T: +44 (0) 207 960 2285 T: +44 (0) 207 960 2339 Smith & Nephew plc 15 Adam Street London WC2N 6LA T: +44 (0) 207 401 7646 29
Slide 30: a! ° smith&nephew
a! ° 74 smith&nephew Supporting healthcare professionals for over 150 years