Smith & Nephew plc · LSE:SN.
Smith & Nephew — Q3 2018 Earnings Presentation
20 slides from Smith & Nephew's earnings presentation, October 2018
Slide 1: 2018 Third Quarter Trading Report
2018 Third Quarter Trading Report Supporting healthcare professionals for over 150 years 1
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: Namal Nawana, Chief Executive Officer
Namal Nawana Chief Executive Officer 3
Slide 4: Q3 revenue: $1,169m +3% underlying, +2% reported
Q3 revenue: $1,169m +3% underlying, +2% reported Q3 revenue split Geographical growth Emerging Markets $207m Global 3% US US 4% $569m Other Established Markets -1% Emerging Markets 10% -5% 0% 5% 10% 15% Other Established Markets $393m ‘Other Established Markets’ is Australia, Canada, Europe, Japan a
Slide 5: Sports Medicine, Trauma & OSB: $476m, +4%
Sports Medicine, Trauma & OSB: $476m, +4% Q3 revenue performance Q3 revenue split • Sports Medicine Joint Repair +8% SMJR $166m • Arthroscopic Enabling Technologies -2% AET $138m • Trauma & Extremities +3% • Other Surgical Businesses* +12% T&E $122m OSB $50m Commentary • REGENETEN™ continues strong
Slide 6: Reconstruction: $374m, +4%
Reconstruction: $374m, +4% Q3 revenue performance Q3 revenue split • Knees: global +4%, US +2%, OUS +5% • Hips: global +4%, US +6%, OUS +3% Commentary Hips $142m • Knees accelerate over H1 • JOURNEY™II, LEGION™ REVISION, and ANTHEM™ drive growth Knees $232m • Hips seeing benefit of focus on POLAR3™
Slide 7: Advanced Wound Management: $319m, +1%
Advanced Wound Management: $319m, +1% Q3 revenue performance Q3 revenue split AWD $54m • Advanced Wound Care +1% AWB $81m • Advanced Wound Bioactives -7% AWC $184m • Advanced Wound Devices +11% Commentary • AWC growing strongly in US; rolling out new tender approach in Europe PICO™ 7 Single Use Nega
Slide 8: New commercial model: creation of global franchises
New commercial model: creation of global franchises Old model: New model: Three generalist commercial leaders Three specialist franchise presidents Specialist commercial role Generalist commercial role Executive Committee member appointed 8
Slide 9: New commercial model: delayering and country clusters
New commercial model: delayering and country clusters Example of old model, Northern and Central Europe: New model: Multiple layers of regional generalists Simplification and specialisation Specialist commercial role Generalist commercial role 9
Slide 10: Improving how we do business
Improving how we do business Portfolio medical device company • Advanced stages of deciding longer- term strategic objectives • Metrics being validated New commercial model and structure • Communication in early 2019 • Corporate structure simplified, top- level changes complete Strategy • Global fra
Slide 11: Graham Baker, Chief Financial Officer
Graham Baker Chief Financial Officer 11
Slide 12: 2018 Guidance
2018 Guidance Sales growth Underlying: 2% to 3% Reported(1): 3% to 4% Trading profit margin At or above 2017 levels Tax rate 20-21%(2) (1) Based on exchange rates prevailing on 26 October 2018. 12 (2) Tax rate on trading result
Slide 13: Summary
ot smith&nephew Summary
Slide 14: Supporting healthcare professionals for over 150 years
ot smith&nephew > smith&nephew Supporting healthcare professionals for over 150 years
Slide 15: Appendices
ot smith&nephew Appendices
Slide 16: 2018 technical guidance
2018 technical guidance October 2018 Foreign exchange and other revenue impact Impact of translational FX on revenue* +0.6% Acquisition impact on revenue +0.3% Exceptional items Restructuring costs c. $120m Acquisition and integration costs c. $5m European Medical Device Regulation (MDR) compliance
Slide 17: Franchise revenue analysis
Franchise revenue analysis 2017 2018 Full Q1 Q2 Q3 Q4 Q1 Q2 Q3 Year Growth Growth Growth Growth Growth Growth Growth Revenue Growth % % % % % % % $m % Sports Medicine, Trauma & OSB 4 3 2 2 3 1 2 476 4 Sports Medicine Joint Repair 7 5 8 6 6 6 8 166 8 Arthroscopic Enabling Technologies (1) (4) (3) (3)
Slide 18: Regional revenue analysis
Regional revenue analysis 2017 2018 Full Q1 Q2 Q3 Q4 Q1 Q2 Q3 Year Growth Growth Growth Growth Growth Growth Growth Revenue Growth % % % % % % % $m % Geographic regions US 1 2 2 1 2 (2) 1 569 4 Other Established 1 (1) 0 (1) 0 (2) 1 393 (1) Markets Established Markets 1 1 1 0 1 (2) 1 962 2 Emerging M
Slide 19: Trading days per quarter
Trading days per quarter Q1 Q2 Q3 Q4 Full Year 2016 64 64 63 60 251 2017 64 63 63 60 250 2018 63 64 63 61 251 2019 63 63 63 62 251 Year-on-year differences in the number of trading days typically impacts our surgical businesses in the Established Markets more than our wholesaler and distributor-supp
Slide 20: Supporting healthcare professionals for over 150 years
ot smith&nephew > smith&nephew Supporting healthcare professionals for over 150 years