Smith & Nephew plc · LSE:SN.
Smith & Nephew — Smith+Nephew — Investor Presentation (June 2022)
27 slides from Smith & Nephew's investor presentation, June 2022
Slide 1: Investor Presentation April-June 2022
Investor Presentation April-June 2022
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 profit margins, market trends and our product pipeline are forward-looking statements. Phras
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: FTSE 100 Shares $5.2bn
100 FTSE 100 A constituent of the UK’s FTSE 100, 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 portfolio medical Stock Exchange year since 1937 technology business that has been trading for over 160 years, and operates
Slide 5: A portfolio medical technology business
A portfolio medical technology business ALLEVYN◊ LIFE PICO◊ Advanced Advanced Negative Pressure Advanced Foam Wound Dressings Wound Care Wound Devices Wound Therapy JOURNEY◊ II BCS Bi-Cruciate Collagenase Advanced Stabilised SANTYL◊ Ointment Wound Knee System Knees Enzymatic debrider Bioactives ENT
Slide 6: Leading positions in attractive markets
Leading positions in attractive markets Sports Medicine Orthopaedics Advanced Wound Hip and Knee Implants Trauma and Extremities Management $5.3bn $14.1bn $12.2bn $10.3bn +13% 2021 growth rate +11% 2021 growth rate +10% 2021 growth rate +11% 2021 growth rate 2017-19 2017-19 2017-19 2017-19 +5% avera
Slide 7: Our performance
Our performance Revenue Trading profit Trading cash conversion $5,212m +10.3%* $936m 18.0% margin 88% 5212 1169 5138 1123 1048 101% 4904 936 90% 88% 85% 83% 4765 683 4560 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 Adjusted earnings per share (EPSA) Dividend per share
Slide 8: Strategy for Growth
Strategy for Growth An inflection point – transforming to a structurally higher growth company Innovation led Productivity & Financial performance Capital Allocation Commercial commitment discipline • Existing strong portfolio Excellence driven • Pipeline of disruptive • Consistent 4-6% organic • In
Slide 9: Solid long-term demand drivers intact
Solid long-term demand drivers intact Prevalence Growth in lifestyle related health conditions Emerging markets Economic development driving healthcare access Lifestyle Higher levels of physical activity later in life Decentralised care Shift to outpatient settings accelerated by COVID Demographics
Slide 10: Strategy for Growth
Strategy for Growth Three simple strategic imperatives Transform our business through Transform innovation and acquisition Accelerate profitable growth through Accelerate prioritisation and customer focus Strengthen the foundation to serve Strengthen customers sustainably and simply 10
Slide 11: Delivering our strategic imperatives
Delivering our strategic imperatives Key value builders driving the growth strategy Strengthen Accelerate Transform • Optimise manufacturing and supply Productivity • Efficiencies through simplification • Maximise strong current portfolio Commercial execution • Tailor commercial approach to evolving
Slide 12: Capital allocation policy
Capital allocation policy Smith+Nephew will use the following capital allocation framework to prioritise the use of cash: 1. Invest 2. Acquire • in innovation to drive organic growth; Invest Acquire • new technologies and expand in higher growth • to meet our segments, that have a sustainability tar
Slide 13: Q1 2022 Financials
Q1 2022 Financials 13
Slide 14: Key messages
Key messages Sports Medicine and Advanced Wound Management continuing to perform well; strengthening Orthopaedics with cementless knee rollout Procedure volumes returning across elective categories, as COVID impact fades in most markets Good start towards 2022 targets, with 5.9% underlying growth in
Slide 15: Q1 2022: Growth across regions and franchises
Q1 2022: Growth across regions and franchises $1,306m, +3.3% reported, +5.9% underlying* Geographical growth Franchise growth Group 5.9% Group 5.9% US Orthopaedics 3.1% 2.6% $659m $541m Other Established Markets Sports Med & ENT 5.9% 8.6% $404m $396m Emerging Markets AWM 14.3% 8.0% $243m $369m * Gro
Slide 16: Orthopaedics
Orthopaedics $541m: +0.3% reported, +2.6% underlying* Sales factors • Rebound in primary Knee replacement Revenue ($m) volumes +2.6% • Hips and Other Recon against strong Q1 2021 $540m $541m comparative • T&E varied by region and category 149 -3.8% 141 25 -19.0% 20 Hips: US +1.7%, OUS -3.2% 154 -0.7
Slide 17: Sports Medicine & ENT
Sports Medicine & ENT $396m: +6.1% reported, +8.6% underlying* Sales factors • Sports Medicine driven by recovery of Knee Repair and growth from new products Revenue ($m) • AET mixed – good growth in fluid +8.6% management and video $373m $396m • Nose and throat case volumes recovering in ENT, along
Slide 18: Advanced Wound Management
Advanced Wound Management $369m: +5.1% reported, +8.0% underlying* Sales factors • AWC growth in all regions, driven by both Revenue ($m) foam and film dressings ◊ • Strong performance of SANTYL in Bioactives +8.0% ◊ • NPWT growth driven by both RENASYS and ◊ $351m $369m PICO 60 +18.6% 69 116 +2.3%
Slide 19: Advancing our Strategy for Growth
Advancing our Strategy for Growth Strengthen Accelerate Transform Progress in 2022 • Implemented new China go-to-market model Productivity • Supply chain improvements, SKU and market prioritisation work underway • Launch flawlessly and at scale: Commercial • LEGION CONCELOC rollout progressing execu
Slide 20: 2022 outlook unchanged
2022 outlook unchanged • Targeting underlying revenue growth of 4.0%-5.0% • Trading margin expansion of around 50bps • Tax rate on trading results in the range of 17-18% 20
Slide 21: Summary and Questions
Summary and Questions 21
Slide 22: Appendices
Appendices 22
Slide 23: Technical guidance
Technical guidance April 2022 Foreign exchange and acquisitions Translational FX impact on revenue growth(1) c. -2.7% Acquisition impact on revenue growth - Non-trading items Restructuring costs $100-110m Acquisition and integration costs $20-30m European Medical Device Regulation (MDR) compliance c
Slide 24: Franchise revenue analysis
Franchise revenue analysis 2021 2022 Q1 Q2 Q3 Q4 Full Year Q1 Q1 Growth Growth Growth Growth Growth Growth Revenue % % % % % % $m Orthopaedics 1.6 43.4 (5.9) (2.6) 6.4 2.6 541 Knee Implants (10.3) 58.8 (6.5) (1.1) 5.1 12.2 231 Hip Implants 9.1 37.2 (7.9) (6.1) 5.8 (0.7) 149 Other Reconstruction 17.7
Slide 25: Regional revenue analysis
Regional revenue analysis 2021 2022 Q1 Q2 Q3 Q4 Full Year Q1 Q1 Growth Growth Growth Growth Growth Growth Revenue % % % % % % $m US 7.1 51.3 (2.5) (0.4) 10.5 3.1 659 Other Established Markets(1) (1.8) 40.1 4.5 (2.4) 7.7 5.9 404 Established Markets 3.4 46.8 0.1 (1.2) 9.4 4.1 1,063 Emerging Markets 21
Slide 26: Q1 consolidated revenue analysis
Q1 consolidated revenue analysis Q1 Q1 Reported Underlying Acquisitions/ Currency 2022 2021 growth growth disposals impact Consolidated revenue by franchise $m $m % % % % Orthopaedics 541 540 0.3 2.6 - (2.3) Knee Implants 231 212 9.3 12.2 - (2.9) Hip Implants 149 154 (3.3) (0.7) - (2.6) Other Recons
Slide 27: 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 2022 64 63 63 60 250 2023 64 63 63 60 250 27