Smith & Nephew plc · LSE:SN.
Smith & Nephew — Q1 2011 Earnings Presentation
24 slides from Smith & Nephew's earnings presentation, Jun 30, 2011
Slide 1: 2011 First Quarter Results
2011 First Quarter Results Good start to the year 1
Slide 2: Forward looking statements
Forward looking statements This document contains certain 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"
Slide 3: Olivier Bohuon, Chief Executive Officer
Olivier Bohuon Chief Executive Officer
Slide 4: Q1 2011 highlights
Q1 2011 highlights • Reported Q1 revenues – $1,055m up 4% underlying • Orthopaedics up 2% – Reconstruction grows above market rate, driven by knees – Trauma delivers another good performance • Endoscopy up 6% – strong repair product revenues • Advanced Wound Management up 6% - NPWT strong • Trading
Slide 5: Adrian Hennah, Chief Financial Officer
Adrian Hennah Chief Financial Officer
Slide 6: Income statement Q1 2011
Income statement Q1 2011 First Quarter 2010 2011 Growth $m $m Reported Underlying Revenue 995 1,055 6% 4% Trading profit 250 241 (4)% (6)% Restructuring and rationalisation costs (2) (1) Amortisation of acquisition intangibles / impairments (8) (9) Operating profit 240 231 Net interest cost (4) (2)
Slide 7: Income statement Q1 2011
Income statement Q1 2011 First Quarter 2010 2011 $m $m Profit before taxation 234 228 Taxation (75) (72) Tax rate* 30.8 % Attributable profit 159 156 Add back: Amortisation of acquisition intangibles / 8 9 impairments Restructuring & rationalisation costs 2 1 Tax on excluded items (2) (2) Adjusted a
Slide 8: Revenue growth by business segment Q1 2011
Revenue growth by business segment Q1 2011 Actual Reported Currency Underlying % % % Quarter 1* Orthopaedics 4 (2) 2 Endoscopy 8 (2) 6 Advanced Wound Management 9 (3) 6 Group 6 (2) 4 * Q1 2011 comprises 64 trading days (2010 – 64 trading days) 8
Slide 9: Underlying revenue growth by geography & business segment Q1 2011
Underlying revenue growth by geography & business segment Q1 2011 US Growth Europe Growth ROW Growth Total Growth Quarter 1 $m % $m % $m % $m % Orthopaedics 306 5 170 (2) 114 3 590 2 Endoscopy 92 1 76 6 65 12 233 6 Advanced Wound Management 41 6 117 2 74 15 232 6 Group 439 4 363 1 253 8 1,055 4 9
Slide 10: Q1 2011 – Orthopaedics
Q1 2011 – Orthopaedics • Knees: market leading performance driven by VERILAST™ and VISIONAIRE™ • Traditional hips grow ahead of market; BHR headwinds • Global revenues $590m in Q1, 2% growth continue - US +5%, Europe -2%, RoW +3% • Trauma, another consistent • Global Reconstruction growth +2% perfor
Slide 11: Q1 2011 - Endoscopy
Q1 2011 - Endoscopy • Shoulder and hip repair strong • Global Revenues $233m in Q1, 6% growth • BIORAPTOR™ Curved – US +1%, Europe +6%, RoW +12% Suture Anchor for • Arthroscopy growth +8% shoulder/hips - Repair +11% • DYONICS PLATINUM - Resection +3% blades introduced • Visualisation -7% • Margin 22
Slide 12: Q1 2011 - Advanced Wound Management
Q1 2011 - Advanced Wound Management • 5 new product introductions • NPWT revenues benefit from broader product range, further launches in Q2 • Global Revenues $232m, 6% growth • NPWT significant contract – US +6%, Europe +2%, RoW + 15% wins • Targeted marketing • Exudate Management +2%, Infection Ma
Slide 13: Profitability by business segment Q1 2011
Profitability by business segment Q1 2011 BlueSky First Quarter Adjusted Revenue Trading Profit Margin Margin 2011 $m $m % % Orthopaedics 590 142 24.1 Endoscopy 233 52 22.3 Advanced Wound Management 232 47 20.1 Total 1,055 241 22.8 2010 Orthopaedics 566 144 25.5 Endoscopy 216 45 21.1 Advanced Wound
Slide 14: Free cash flow Q1 2011
Free cash flow Q1 2011 First Quarter 2010 2011 $m $m Trading profit 250 241 Share based payment 5 7 Depreciation and amortisation 60 64 Capital expenditure (74) (73) Movements in working capital and provisions (53) (33) Trading cash flow 188 206 Restructuring, rationalisation & acquisition costs (5)
Slide 15: Q1 2011 Summary and outlook
Q1 2011 Summary and outlook • Good start to the year • No change in 2011 outlook ‐ Revenue: above market growth in Orthopedic Reconstruction, Endoscopy sports medicine and Advanced Wound Management; consistent improvement in Orthopedic Trauma ‐ Margin: further efficiency improvements broadly match i
Slide 16: Questions
>< smith&nephew Questions
Slide 17: We are smith&nephew
“ We are smith&nephew
Slide 18: Appendices
>< smith&nephew Appendices
Slide 19: Quarterly revenues
Quarterly revenues Smith & Nephew Key Product Line Revenues in $m at Average Rates and Underlying Growth 2010 2011 Q1 Q2 Q3 Q4 Full Year Q1 Growth* Growth* Growth* Growth* Growth* Revenue Growth* % % % % % $m % Orthopaedics Reconstruction Knees 9% 3% 6% 4% 5% 224 5% Hips 6% 0% 0% (5)% 0% 184 (2)% Tr
Slide 20: Exchange rates
Exchange rates $:€ Q1/10 FY/10 Q1/11 Period end 1.35 1.34 1.41 Average 1.38 1.32 1.37 $:£ Period end 1.52 1.57 1.60 Average 1.56 1.54 1.60 Percentage of Revenue by Geographic Market: Q1 % United States 42 United Kingdom 6 Other Europe 28 Other 24 100 20
Slide 21: Analysis of restructuring and acquisition costs
Analysis of restructuring and acquisition costs P&L Charge Cash Spend Q1 Total to date Q1 Total to date $m $m $m $m EIP - cash costs * 1 116 1 109 - asset w/offs - 26 n/a n/a Plus Integration - cash costs ** - 95 - 92 - asset w/offs - 28 n/a n/a * Target $125m ** Target $60-80m, plus $15m costs of i
Slide 22: Reconciliation of free cash flow to IAS 7 net cash flow from operating activities
Reconciliation of free cash flow to IAS 7 net cash flow from operating activities First Quarter 2010 2011 $m $m Free cash flow 131 139 Add back: capital expenditure 74 73 Net cash inflow fromoperating activities (IAS 7) 205 212 22
Slide 23: Business days per quarter
Business days per quarter Q1 Q2 Q3 Q4 Full Year 2010 64 64 63 60 251 2011 64 63 63 60 250 23
Slide 24: New products 2011
New products 2011 Q1 Q2 Q3 Q4 SMF™ Short Modular Femoral Hip System LEGION™ XLPE Inserts ACTICOAT™ Ortho SURESHOT™ Humeral SCOLISCORETM AIS VISIONAIRE™ Technology for DUROLANE® -SJ Prognostic test TC Plus Specialty Blades for Small Joint BIORAPTOR™ Curved Suture Anatomic ACL Guides LEGION Narrow and