Smith & Nephew Plc · LSE:SN.
Smith & Nephew — Investor Presentation (April 2019)
24 slides from Smith & Nephew's investor presentation, April 2019
Slide 1: Investor Presentation April – June 2019
Investor Presentation April – June 2019
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: Smith & Nephew
Smith & Nephew 100 FTSE100 A constituent of the UK’s FTSE100, with ADRs traded Shares S&N has a progressive dividend policy, and has Smith & Nephew is a global Medical Device on the New York Stock paid a dividend every year portfolio company, that has Exchange since 1937 been trading for over 160 ye
Slide 4: A portfolio medical device company
A portfolio medical device company ALLEVYN™ LIFE PICO™ Advanced Foam Advanced Advanced Negative Pressure Wound Dressings Wound Care Wound Devices Wound Therapy Advanced JOURNEY™ II BCS Collagenase Bi-Cruciate SANTYL™ Ointment Wound Stabilised Enzymatic debrider Bioactives Knees Knee System ENT $4.9b
Slide 5: Our performance
Our performance Revenue Trading Profit Trading cash conversion $4,904m +2%* $1,123m 22.9% margin 85% 4904 1123 85% 90% 85% 1099 74% 75% 4765 1055 1048 4669 4617 4634 1020 2014 2015 2016 2017 2018 2014 2015 2016 2017 2014 2015 2016 2017 2018 Adjusted earnings per share (EPSA) Dividend per share Net D
Slide 6: Q1 2019 revenue: $1,202m, 4.4% underlying, 0.5% reported
Q1 2019 revenue: $1,202m, 4.4% underlying, 0.5% reported Revenue split Product franchise growth Emerging Markets $219m Orthopaedics 3.9% US Knees 4.1% $568m Hips 2.4% Other Established Markets Other Recon 6.9% $415m Trauma 4.8% Geographical growth Sports Medicine, ENT 5.3% Sports Medicine Joint Repa
Slide 7: Full year 2018 revenue: $4,904m, 2% underlying, 3% reported
Full year 2018 revenue: $4,904m, 2% underlying, 3% reported Revenue split Product franchise growth Emerging Markets $857m Orthopaedics 3% US Knees 3% $2354m Hips 2% Other Established Markets Other Recon 36% $1693m Trauma -1% Geographical growth Sports Medicine, ENT 2% Sports Medicine Joint Repair 7%
Slide 8: Strategic imperatives for the company
Strategic imperatives for the company Grow Together Effectively 1 2 3 4 5 Achieve the full Transform the Expand in high- Strengthen talent Become the best potential of our business through growth segments and capabilities owner portfolio enabling technologies 10
Slide 9: New commercial model: creation of global franchises
New commercial model: creation of global franchises 9
Slide 10: Moving from robotic-assisted surgery to a digital ecosystem
Moving from robotic-assisted surgery to a digital ecosystem NAVIO™ Surgical System Launch of NAVIO 7.0 in H2 2019 Launch of next-generation platform, Ecosystem incorporating stand-alone with Brainlab hip and knee software robotic arms, augmented reality Brainlab hip software on NAVIO Intro
Slide 11: Executing on M&A strategy
Executing on M&A strategy Acquisition of Orthopaedic Joint Reconstruction Business 11
Slide 12: Life Unlimited culture pillars: Care, Collaboration, Courage
The pillars of a new, purpose-driven culture Life Unlimited Care Collaboration Courage A culture of empathy and A culture of team, A culture of continuous learning, understanding for each other, based on mutual trust and respect innovation and accountability our customers and patients 12
Slide 13: APEX summary
APEX summary • Benefits of $160m p.a. by 2022 • Total one-off costs (mainly cash) up to $240m (c.150% of annualised run-rate benefits) • Period: 2018 – 2022, with around 75% of benefits and >75% of costs by 2020 • Benefits underpin medium-term margin guidance 13
Slide 14: 2019 Guidance
2019 Guidance Sales growth: Trading profit margin: Tax rate: 2019 Underlying: 2.5% to 3.5% 22.8 to 23.2% 19% to 21%(2) Reported: 2.9% to 3.9%(1) Sales growth: Trading profit margin: Tax rate: Medium term Consistent growth above Ongoing improvement 19% to 21%(2) market (1) Based on the foreign exchan
Slide 15: Appendices
>¢smith&nephew Appendices 15
Slide 16: Technical guidance
Technical guidance Guidance April 2019 Foreign exchange and other revenue impact Impact of translational FX on revenue(1) (2.0%) Acquisition impact on revenue +2.4% Non-trading items Restructuring costs c. $100-120m Acquisition and integration costs c. $30-40m European Medical Device Regulation (MDR
Slide 17: Franchise revenue analysis
Franchise revenue analysis 2018 2019 Full Q1 Q2 Q3 Q4 Q1 Year Growth Growth Growth Growth Growth Revenue Growth % % % % % $m % Orthopaedics 0 1 5 4 3 546 3.9 Knee Implants 2 3 4 3 3 261 4.1 Hip Implants (2) 1 4 4 2 152 2.4 Other Reconstruction 30 27 43 45 36 14 6.9 Trauma (2) (5) 3 1 (1) 119 4.8 Spo
Slide 18: Regional revenue analysis
Regional revenue analysis 2018 2019 Full Q1 Q2 Q3 Q4 Q1 Year Growth Growth Growth Growth Growth Revenue Growth % % % % % $m % US (2) 1 4 3 1 568 4.0 Other Established Markets(1) (2) 1 (1) 0 0 415 (0.1) Total Established Markets (2) 1 2 2 1 983 2.2 Emerging Markets 9 6 10 8 8 219 15.3 Total 0 2 3 3 2
Slide 19: 2018 Full year trading income statement
2018 Full year trading income statement Full Year 2018 2017 $m $m Revenue 4,904 4,765 2% underlying growth Cost of goods sold (1,294) (1,248) Gross profit 3,610 3,517 Gross profit margin 73.6% 73.8% Selling, general and admin (2,250) (2,246) Research and development (237) (223) Trading profit 1,123
Slide 20: 2018 Full year EPSA and EPS
2018 Full year EPSA and EPS Full Year 2018 2017 Growth $m $m Trading profit 1,123 1,048 7% Net interest payable (51) (51) Other finance costs (16) (7) Share of results from associate (6) 6 Adjusted profit before tax 1,050 996 5% 2018 tax rate: 16% Taxation on trading result (169) (170) including one
Slide 21: 2018 Full year cash flow
2018 Full year cash flow Full Year 2018 2017 $m $m Trading profit 1,123 1,048 Share based payment 35 31 Depreciation and amortisation 335 320 Capital expenditure (347) (376) Movements in working capital and other (195) (83) Trading cash flow 951 940 Trading cash conversion 85% 90% Restructuring, acq
Slide 22: 2018 Full Year IFRS reconciliation
2018 Full Year IFRS reconciliation Full Year 2018 2017 Growth $m $m Trading profit 1,123 1,048 7% Trading margin 22.9% 22.0% +90bps Acquisition related costs 7 10 Restructuring and rationalisation (120) - Amortisation of acquisition intangibles (113) (140) Legal and other items (34) 16 IFRS Operatin
Slide 23: Trading days per quarter
Trading days per quarter Q1 Q2 Q3 Q4 Full Year 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-supported businesses. We
Slide 24: Notes
Notes >¢smith&nephew 24