Smith & Nephew plc · LSE:SN.
Smith & Nephew — Smith+Nephew — Q1 2020 Earnings Presentation
21 slides from Smith & Nephew's earnings presentation, April 2020
Slide 1: First Quarter 2020
SmithNephew First Quarter 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: Q1 Trading
Q1 Trading Roland Diggelmann Chief Executive Officer 3
Slide 4: Q1 revenue: $1,134m -7.6% underlying, -5.7% reported
Q1 revenue: $1,134m -7.6% underlying, -5.7% reported Franchise split Franchise growth Advanced Wound Management -7.6% Global $309m Orthopaedics $497m -8.3% Orthopaedics Sports Med & -9.5% ENT -4.0% AWM Sports Med & ENT $328m 4
Slide 5: Q1 revenue: $1,134m -7.6% underlying, -5.7% reported
Q1 revenue: $1,134m -7.6% underlying, -5.7% reported Geographical split Geographical growth Emerging Markets $174m -7.6% Global US -4.7% US $581m Other Est -6.3% Markets Other Established Emerging Markets -17.9% Markets $379m 5
Slide 6: Orthopaedics: $497m, -8.3% underlying
Orthopaedics: $497m, -8.3% underlying Revenue performance Q1 revenue split Knees -10.6% (US -7.5%, OUS -14.5%) Knees, $230m Hips -8.6% (US -5.4%, OUS -11.5%) Other Reconstruction* +19.4% Hips, $137m Trauma -7.1% Other Recon, $21m Orthopaedics -8.3% Trauma, $109m Commentary • Knee and Hip volumes imp
Slide 7: Sports Medicine & ENT: $328m, -9.5% underlying
Sports Medicine & ENT: $328m, -9.5% underlying Revenue performance Q1 revenue split Sports Medicine Joint Repair -7.1% Arthroscopic Enabling -11.2% Technologies ENT -15.2% ENT, $30m Sports Medicine & ENT -9.5% AET, $126m Commentary SMJR, $172m • Restrictions on elective Sports Medicine procedures, e
Slide 8: Advanced Wound Management: $309m, -4.0% underlying
Advanced Wound Management: $309m, -4.0% underlying Revenue performance Q1 revenue split Advanced Wound Care -6.7% AWD, $60m AWB, $91m Advanced Wound Bioactives -8.6% AWC, $158m Advanced Wound Devices +13.0% Advanced Wound Management -4.0% Commentary • Franchise impacted by elective surgery exposure
Slide 9: Covid-19 response and preparing for the recovery
Covid-19 response and preparing for the recovery Roland Diggelmann Chief Executive Officer Ian Melling Interim Chief Financial Officer 9
Slide 10: 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 11: 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 12: 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 13: 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 14: 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 15: 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 16: Appendices
Appendices 16
Slide 17: 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 18: 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 19: 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 19
Slide 20: Sustainability Targets
Sustainability Targets People Planet Products Creating a 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 Product
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