Smith & Nephew plc · LSE:SN.
Smith & Nephew — Smith+Nephew — Investor Presentation (June 2020)
22 slides from Smith & Nephew's investor presentation, June 2020
Slide 1: Investor Presentation April – June 2020
Investor Presentation April – June 2020
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: 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: FTSE100 Shares $5.1bn
100 FTSE100 A constituent of the UK’s FTSE100, 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 global Medical Device Stock Exchange year since 1937 portfolio company, that has been trading for over 160 years, and operates
Slide 5: 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 JOURNEY◊ II BCS Collagenase Advanced Bi-Cruciate SANTYL◊ Ointment Wound Stabilised Enzymatic debrider Bioactives Knee System Knees ENT $5.1b
Slide 6: Leading positions in stable growing markets
Leading positions in stable growing markets Hip & Knee Implants Sports Medicine Advanced Wound Management $14.8bn market $5.3bn market $9.4bn market (growth +3%) (growth +5%) (growth +4%) Others Others 3M 15% 17% 19% Zimmer Smith+ Biomet Nephew 32% Others DePuy Arthrex 12% 51% Synthes 33% Smith+ 13%
Slide 7: Our performance
Our performance Revenue Trading profit Trading cash conversion $5,138m +4.4%* $1,169m 22.8% margin 83% 5138 1169 90% 85% 85% 83% 4904 1123 75% 1099 4765 4669 1048 4634 1020 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Adjusted earnings per share (EPSA) Dividend per shar
Slide 8: Q1 2020 revenue: $1,134m, -7.6% underlying, -5.7% reported
Q1 2020 revenue: $1,134m, -7.6% underlying, -5.7% reported Revenue split Product franchise growth Emerging Markets $174m Orthopaedics -8.3% Knees -10.6% US $581m Hips -8.6% Other Other Recon 19.4% Established Markets Trauma -7.1% $379m Sports Medicine, ENT -9.5% Geographical growth Sports Medicine J
Slide 9: Weekly sales growth development; ~-47% underlying revenue growth in April
Weekly sales growth development; ~-47% underlying revenue growth in month of April China United States UK +100% +100% +100% +50% +50% +50% 0% 0% 0% (50%) (50%) (50%) (100%) (100%) (100%) Feb Mar Apr Feb Mar Apr Feb Mar Apr 2019 sales: 2019 sales: 2019 sales: $336m $2,551m $211m ~7% of group ~50% of
Slide 10: Movement towards restarting elective surgery
Movement towards restarting elective surgery Timing Key development China From March Levels of elective surgery increasing, and now at estimated 50-70% of typical volumes Elective surgeries beginning based on CMS framework and largely dependent on US From 22 April hospital capacity – announcements f
Slide 11: Trading profit cost structure - Balancing cost control with readiness
Trading profit cost structure - Balancing cost control with readiness Taking action on costs Cost base includes fixed components • Up to $200m of cost savings in 2020 • SG&A the primary source – including variable ~55% materials; remainder largely fixed pay, travel, promotional activity, events, and
Slide 12: Balance sheet and liquidity
Balance sheet and liquidity Liquidity as of end Q1 2020 Capital allocation Cash flow • Receivables and payables 1 2 3 4 • Net debt excluding lease liabilities continuing to be paid of $1.8bn • Slowing of capex programmes • $3.4bn of committed credit facilities Reinvest Progressive Acquisition Return
Slide 13: Ensuring commercial readiness
Ensuring commercial readiness People Customer support • Digital delivery of professional • Protecting sales rep commission education through crisis • Ensuring supply-chain continuity • Step-up in product training and professional development • Supply of face shields Innovation Assets from M&A Suppor
Slide 14: Summary
Summary • Expect second quarter revenue and first half trading margin to be substantially down on the prior year • Ready to serve markets as they recover, while taking action to mitigate the impact • Resilient portfolio businesses within Wound and Trauma; strong balance sheet, with access to signifi
Slide 15: Delivering on strategic imperatives
Delivering on strategic imperatives 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 GROW TOGETHER EFFECTIVELY 15
Slide 16: Priorities for 2020: Excellence through the value chain
Priorities for 2020: Excellence through the value chain Become the best owner Operations transformation Commercial transformation Key initiatives: Key initiatives: • Optimised manufacturing network • Increasing share of direct distribution • Rollout of lean methodology • Sales training and excellenc
Slide 17: Appendices
Appendices 17
Slide 18: Franchise revenue analysis
Franchise revenue analysis 2019 2020 Q1 Q2 Q3 Q4 Full Year Q1 Q1 Growth Growth Growth Growth Growth Revenue Growth % % % % % $m % Orthopaedics 3.9 3.6 3.4 5.1 4.0 497 (8.3) Knee Implants 4.1 4.3 4.6 4.7 4.4 230 (10.6) Hip Implants 2.4 2.9 2.6 0.7 2.1 137 (8.6) Other Reconstruction 6.9 3.5 1.5 31.6 1
Slide 19: Regional revenue analysis
Regional revenue analysis 2019 2020 Q1 Q2 Q3 Q4 Full Year Q1 Q1 Growth Growth Growth Growth Growth Revenue Growth % % % % % $m % US 4.0 2.3 2.7 4.2 3.3 581 (4.7) Other Established Markets(1) (0.1) (1.3) (0.3) 2.4 0.2 379 (6.3) Established Markets 2.2 0.9 1.5 3.5 2.1 960 (5.4) Emerging Markets 15.3 1
Slide 20: Trading days per quarter
Trading days per quarter Q1 Q2 Q3 Q4 Full year 2019 63 63 63 62 251 2020 62 63 63 64 252 2021 64 64 63 60 251 20
Slide 21: Sustainability Targets
Sustainability Targets People Planet Products Creating an lasting positive impact A medical technology business with Innovating sustainably on our communities a positive impact By 2022, include sustainability review Between 2020 and 2030, contribute Achieve an 80% absolute reduction in in New Produc
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