Smith & Nephew plc · LSE:SN.
Smith & Nephew — Smith+Nephew — Q3 2021 Earnings Presentation
26 slides from Smith & Nephew's earnings presentation, November 2021
Slide 1: Investor Presentation October – December 2021
Investor Presentation October – December 2021
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 $4.6bn
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 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
Slide 6: Leading positions in attractive markets
Leading positions in attractive markets Hip & Knee Implants Sports Medicine Advanced Wound Management $12.6bn market $4.6bn market $9.1bn market +2% 2017-19 average growth +5% 2017-19 average growth +5% 2017-19 average growth -15% 2020 growth -12% 2020 growth -3% 2020 growth Others Others 3M 15% 17%
Slide 7: Our performance
Our performance Revenue Trading profit Trading cash conversion $4,560m -12.1%* $683m 15.0% margin 101% 5138 1123 1169 101% 1020 1048 90% 85% 4904 83% 75% 4765 4669 683 4560 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 Adjusted earnings per share (EPSA) Dividend per shar
Slide 8: Third Quarter 2021
Third Quarter 2021 8
Slide 9: Q3 performance and actions
Q3 performance and actions Sports Medicine and AWM • Strong performance from around 60% of the business • Growing above pre-COVID levels • Benefitting from execution, innovation and M&A Orthopaedics • Cementless knee launch filling major product gap • Actions underway to address supply chain challen
Slide 10: Q3 2021 growth vs 2020
Q3 2021 growth vs 2020 $1,266m, +5.5% reported, +2.3% underlying Franchise growth Geographical growth Group 2.3% Group 2.3% Orthopaedics US -5.9% -2.5% $508m $633m Sports Med & ENT Other Established Markets 6.5% 4.5% $379m $398m AWM Emerging Markets 10.9% 13.1% $379m $235m 10
Slide 11: Orthopaedics
Orthopaedics $508m: -0.7% reported, -5.9% underlying* Revenue ($m) -5.9% Sales factors $512m $508m • Knee and Hip growth reflects COVID, supply, 118 -4.2% 136 19 +5.8% and China VBP 20 156 -7.9% 145 • CORI rollout continuing - formal launch in Hips: US -5.0%, OUS -10.8% Knees: US -11.6%, OUS -0.1% E
Slide 12: Sports Medicine & ENT
Sports Medicine & ENT $379m: +8.3% reported, +6.5% underlying* Revenue ($m) +6.5% Sales factors $379m $350m 33 +16.1% 28 • Joint repair launches ahead of plans; knee 139 136 +0.5% repair recovering • Launch of WEREWOLF FASTSEAL in AET 186 +9.5% 207 • ENT growth driven by Asia-Pacific; early signs of
Slide 13: Advanced Wound Management
Advanced Wound Management $379m: +12.1% reported, +10.9% underlying* Revenue ($m) +10.9% $379m $338m Sales factors +16.8% 69 58 • AWC strength across all major categories 121 117 +3.3% • Good growth from SANTYL in Bioactives 189 • AWD growth driven by PICO strategy, 163 +14.0% RENASYS gains in US Q3
Slide 14: 2021 outlook
2021 outlook July 2021: • Targeting underlying revenue growth of 10-13% • Trading margin range of 18-19% • Tax rate on trading results in the range of 18-19% November 2021: • Narrowing expectations after first nine months • Underlying growth and trading margin expected at low end of guidance range 1
Slide 15: New initiatives to drive Orthopaedics acceleration
Two of three franchises above pre-COVID level YTD New initiatives to drive Orthopaedics acceleration Contributions to group revenue growth vs 9m 2019 ($m) +2.9% +4.7% +1.7% -16.8% -16.5% Accelerate Improve • Sports Medicine & ENT and Advanced Wound Management franchises performing well versus peers,
Slide 16: Tackling the supply chain challenges
Tackling the supply chain challenges Strengthened leadership and actions underway Staffing shortages Logistics disruption Raw materials shortages Challenge Orthopaedic production and Ability to move finished Global supply disruption supply from Memphis products and cost inflation Status Improving Im
Slide 17: Strengthening our commercial model
Strengthening our commercial model Bringing Orthopaedics and Sports Medicine together • Leveraging leading Sports Medicine position and broad Orthopaedics portfolio under one leader • Enables unified approach to key high-growth opportunities • ASCs: leveraging presence in Sports Medicine to access n
Slide 18: Cementless knee launch starting
Cementless knee launch starting Entry into key high-growth segment • First US surgeries performed with LEGION CONCELOC in October 2021 • CONCELOC porous technology first used in REDAPT Revision Hip System • Addition of LEGION CONCELOC software to CORI robotics planned for 2022 • Cementless Knees a >
Slide 19: Appendices
Appendices 19
Slide 20: Technical guidance
Technical guidance November 2021 Foreign exchange and acquisitions Translational FX impact on revenue growth(1) c.2.3% Acquisition impact on revenue growth c.1.9% Non-trading items Restructuring costs $145-155m Acquisition and integration costs $35-45m European Medical Device Regulation (MDR) compli
Slide 21: Franchise revenue analysis
Franchise revenue analysis 2020 2021 Q1 Q2 Q3 Q4 Full Year Q1 Q2 Q3 Q3 Growth Growth Growth Growth Growth Growth Growth Growth Revenue % % % % % % % % $m Orthopaedics (8.3) (34.0) (2.8) (10.2) (14.0) 1.6 43.4 (5.9) 508 Knee Implants (10.6) (46.9) (9.5) (16.2) (21.0) (10.3) 58.8 (6.5) 207 Hip Implant
Slide 22: Regional revenue analysis
Regional revenue analysis 2020 2021 Q1 Q2 Q3 Q4 Full Year Q1 Q2 Q3 Q3 Growth Growth Growth Growth Growth Growth Growth Growth Revenue % % % % % % % % $m US (4.7) (31.8) 0.9 (4.9) (10.1) 7.1 51.3 (2.5) 633 Other Established Markets(1) (6.3) (30.8) (6.2) (6.2) (12.3) (1.8) 40.1 4.5 398 Established Mar
Slide 23: Q3 consolidated revenue analysis
Q3 consolidated revenue analysis Q3 Q3 Reported Underlying Acquisitions/ Currency 2021 2020 growth growth disposals impact Consolidated revenue by franchise $m $m % % % % Orthopaedics 508 512 (0.7) (5.9) 4.1 1.1 Knee Implants 207 219 (5.6) (6.5) - 0.9 Hip Implants 145 156 (6.7) (7.9) - 1.2 Other Rec
Slide 24: 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 24
Slide 25: Our sustainability strategy and 2020 highlights
Our sustainability strategy and 2020 highlights People Planet Products Creating a lasting positive impact on our A medical technology business with a Innovating sustainably communities positive impact 8,000 hours of employee volunteering in the All sites in Memphis (US) began sourcing Started to dev
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