TIDMSN.
RNS Number : 2605E
Smith & Nephew Plc
05 May 2017
Smith & Nephew 2017 First Quarter Trading Report
3% underlying revenue growth delivered; in-line with full year
guidance
5 May 2017
Smith & Nephew plc (LSE:SN, NYSE:SNN) Trading Report for the
first quarter ended 1 April 2017.
Highlights
-- Revenue $1,142million, flat on a reported basis after -2%
impact from Gynaecology disposal and -1% currency headwind. Revenue
up 3% on an underlying basis
-- Emerging markets returned to double digit growth with revenue
up 13% on a reported and 12% on an underlying basis
-- Strong revenue growth continues in Knee Implants, up 4% reported and 5% underlying
-- Advanced Wound Management reported revenue down -1% reported
and up 1% underlying, with expected weakness in Advanced Wound
Bioactives offset by a strong quarter from Advanced Wound
Devices
-- Smith & Nephew is on-track to deliver 3-4% underlying revenue growth for full year
Commenting on Q1, Olivier Bohuon, Chief Executive Officer of
Smith & Nephew, said:
"I am pleased with the start of 2017, which was in-line with our
expectations. In particular, performance in the Emerging Markets
was good, returning to double-digit growth, with China up 14%
underlying. Our innovative new products, such as the LENS camera
and WEREWOLF COBLATION systems, have been well received, and we
look forward to the imminent full market release of the Total Knee
Application on our NAVIO robotics-assisted surgery system."
"Over the last few years we have successfully put in place the
right structures and capabilities to make the Group stronger,
simpler, more agile and efficient. We continue to focus on
execution and expect to see progress through the year."
Enquiries
Investors
+44 (0) 20 7960
Ingeborg Øie 2285
Smith & Nephew
Media
+44 (0) 20 7401
Charles Reynolds 7646
Smith & Nephew
+44 (0) 20 3727
Ben Atwell / Matthew Cole 1000
FTI Consulting
Analyst conference call
A conference call to discuss Smith & Nephew's first quarter
results will be held at 8:30am BST / 3:30am EDT on Friday 5 May.
This can be heard live via an audio webcast on the Smith &
Nephew website at http://www.smith-nephew.com/results and will be
available on the site archive shortly afterward. For those who wish
to dial in to the call, dial in details can be accessed on our
website using the aforementioned link.
Notes
1. All numbers given are for the quarter ended 1 April 2017 unless stated otherwise.
2. Unless otherwise specified as 'reported' all revenue growth
throughout this document is 'underlying' after adjusting for the
effects of currency translation and including the comparative
impact of acquisitions and excluding disposals. All percentages
compare to the equivalent 2016 period.
Underlying revenue growth is used to compare the revenue in a
given period to the comparative period on a like-for-like basis.
Underlying revenue growth reconciles to reported revenue growth,
the most directly comparable financial measure calculated in
accordance with IFRS, by making adjustments for the effect of
acquisitions and disposals and the impact of movements in exchange
rates (currency impact), as described below.
The effect of acquisitions and disposals measures the impact on
revenue from newly acquired material business combinations and
recent material business disposals. This is calculated by comparing
the current year, constant currency actual revenue (which include
acquisitions and exclude disposals from the relevant date of
completion) with prior year, constant currency actual revenue,
adjusted to include the results of acquisitions and exclude
disposals for the commensurate period in the prior year.
Currency impact measures the increase/decrease in revenue
resulting from currency movements on non-US Dollar sales and is
measured as the difference between: 1) the increase/decrease in
current year revenue translated into US Dollars at the current year
average rate and the prior year revenue translated at the prior
year average rate; and 2) the increase/decrease being measured by
translating current and prior year revenue into US Dollars using a
constant fixed rate.
Forward calendar
Smith & Nephew's H1 results will be released on 27 July
2017.
About Smith & Nephew
Smith & Nephew is a global medical technology business
dedicated to supporting healthcare professionals in their daily
efforts to improve the lives of their patients. With leadership
positions in Orthopaedic Reconstruction, Advanced Wound Management,
Sports Medicine and Trauma & Extremities, Smith & Nephew
has more than 15,000 employees and a presence in more than 100
countries. Annual sales in 2016 were almost $4.7 billion. Smith
& Nephew is a member of the FTSE100 (LSE:SN, NYSE:SNN).
For more information about Smith & Nephew, please visit our
corporate website www.smith-nephew.com, follow @SmithNephewplc on
Twitter or visit SmithNephewplc on Facebook.com.
Forward-looking Statements
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 as "aim",
"plan", "intend", "anticipate", "well-placed", "believe",
"estimate", "expect", "target", "consider" and similar expressions
are generally intended to identify forward-looking statements.
Forward-looking statements involve known and unknown risks,
uncertainties and other important factors that could cause actual
results to differ materially from what is expressed or implied by
the statements. For Smith & Nephew, these factors include:
economic and financial conditions in the markets we serve,
especially those affecting health care providers, payers and
customers; price levels for established and innovative medical
devices; developments in medical technology; regulatory approvals,
reimbursement decisions or other government actions; product
defects or recalls or other problems with quality management
systems or failure to comply with related regulations; litigation
relating to patent or other claims; legal compliance risks and
related investigative, remedial or enforcement actions; disruption
to our supply chain or operations or those of our suppliers;
competition for qualified personnel; strategic actions, including
acquisitions and dispositions, our success in performing due
diligence, valuing and integrating acquired businesses; disruption
that may result from transactions or other changes we make in our
business plans or organisation to adapt to market developments; and
numerous other matters that affect us or our markets, including
those of a political, economic, business, competitive or
reputational nature. Please refer to the documents that Smith &
Nephew has filed with the U.S. Securities and Exchange Commission
under the U.S. Securities Exchange Act of 1934, as amended,
including Smith & Nephew's most recent annual report on Form
20-F, for a discussion of certain of these factors. Any
forward-looking statement is based on information available to
Smith & Nephew as of the date of the statement. All written or
oral forward-looking statements attributable to Smith & Nephew
are qualified by this caution. Smith & Nephew does not
undertake any obligation to update or revise any forward-looking
statement to reflect any change in circumstances or in Smith &
Nephew's expectations.
Trademark of Smith & Nephew. Certain marks registered US
Patent and Trademark Office.
First quarter trading update
First quarter revenue was $1,142 million (2016: $1,137 million),
flat on a reported basis with foreign exchange a -1% headwind and
the disposal of the Gynaecology business last year a -2% headwind.
Underlying revenue growth was therefore 3%, in-line with our full
year guidance.
Q1 2017 comprised 64 trading days, the same number as Q1
2016.
Unless otherwise specified as 'reported' all revenue growth
rates throughout this document are underlying increases/decreases
after adjusting for the effects of currency translation and
including the comparative impact of acquisitions and excluding
disposals. All percentages compare to the equivalent 2016
period.
Consolidated revenue analysis
1 April 2 April Reported Underlying Acquisitions
Currency
Consolidated revenue 2017 2016 growth growth(i) /disposals impact
by franchise $m $m % % % %
--------------------------- -------- -------- --------- ------------ ------------- ---------
Sports Medicine,
Trauma & Other 466 468 0% 4% -4% 0%
--------------------------- -------- -------- --------- ------------ ------------- ---------
Sports Medicine Joint
Repair 150 141 6% 7% 0% -1%
Arthroscopic Enabling
Technologies 153 156 -2% -1% 0% -1%
Trauma & Extremities 120 114 5% 5% 0% 0%
Other Surgical Businesses 43 57 -23% 7% -30% 0%
Reconstruction 396 387 2% 3% 0% -1%
--------------------------- -------- -------- --------- ------------ ------------- ---------
Knee Implants 244 234 4% 5% 0% -1%
Hip Implants 152 153 -1% 0% 0% -1%
Advanced Wound Management 280 282 -1% 1% 0% -2%
--------------------------- -------- -------- --------- ------------ ------------- ---------
Advanced Wound Care 170 171 -1% 1% 0% -2%
Advanced Wound Bioactives 66 72 -9% -8% 0% -1%
Advanced Wound Devices 44 39 14% 16% 0% -2%
Total 1,142 1,137 0% 3% -2% -1%
--------------------------- -------- -------- --------- ------------ ------------- ---------
Consolidated revenue
by geography
--------------------------- -------- -------- --------- ------------ ------------- ---------
US 555 563 -1% 1% -2% 0%
Other Established
Markets(ii) 414 421 -2% 1% 0% -3%
Emerging Markets 173 153 13% 12% 0% 1%
Total 1,142 1,137 0% 3% -2% -1%
--------------------------- -------- -------- --------- ------------ ------------- ---------
(i) Underlying growth is defined in Note 2 on page 2
(ii) Other Established Markets are Europe, Canada, Japan,
Australia and New Zealand
Regional performance
Revenue grew 1% in the Established Markets in the quarter, with
the US and Other Established Markets both up 1%. In Europe we are
making progress improving our execution, although the slight
headwinds seen last year in some European countries continued.
Performance in the Emerging Markets was good, returning to
double-digit growth, with China growing 14% in the quarter.
Franchise highlights
Sports Medicine Joint Repair had a good quarter, growing revenue
7% over the same period in 2016, driven by demand for our shoulder
repair portfolio. In Arthroscopic Enabling Technologies revenue
fell -1% with continued softness in mechanical resection. The
roll-out of our LENS visualisation and WEREWOLF COBLATION systems
are underway and we expect an increasing contribution from these
exciting new products across the year.
Trauma & Extremities revenue was up 5%, the best quarter of
growth for two years. This reflects both the annualisation of the
reduced tender activity in the oil-dependent Gulf States and a good
quarter of growth from our TRIGEN INTERTAN hip fracture system
where new clinical evidence continues to support increased
uptake.
Other Surgical Businesses grew revenue by 7%. This is slightly
slower than recent quarters following a softer performance in Ear,
Nose & Throat ('ENT'), the larger business within this
franchise. Capital sales of the NAVIO robotics-assisted surgery
system are included in this franchise. Our Total Knee Application
for NAVIO was well received when we previewed it at the Annual
American Academy of Orthopaedic Surgeons meeting in March. This is
expected to enter full market release for our JOURNEY II, LEGION
and GENESIS II Total Knee Systems in Q2 2017.
In Reconstruction, our Knee Implants franchise grew strongly,
with revenue up 5%. This was underpinned by continued high demand
for our JOURNEY II Total Knee System. In Hip Implants revenue was
flat. We expect the benefits of the investments in the REDAPT
Revision System and POLARSTEM Cementless Stem System to
increasingly contribute to growth through 2017.
In Advanced Wound Care revenue was up 1%. Strong growth in the
US, led by demand for the ALLEVYN range of foam dressings, was
offset by the continuing destocking in China and expected weakness
in some European markets. After the quarter end we signed a
worldwide distribution agreement for MolecuLight i:X(TM) , a
handheld point-of-care imaging device that uses fluorescence
imaging to display potentially harmful concentrations of bacteria
in wounds in real-time.
Advanced Wound Bioactives revenue was down -8%, in-line with our
internal forecasts, as SANTYL continued to see quarterly variation
driven by distributor stocking patterns. We expect SANTYL to
benefit from new analysis demonstrating its effectiveness in
treating pressure ulcers, supporting a better performance in the
second half of the year.
Revenue in Advanced Wound Devices was up 16%, with our
disposable negative pressure wound therapy ('NPWT') device PICO
continuing to perform very well. During the quarter we made a
strategic investment and signed a distribution agreement with Leaf
Healthcare, a developer of a unique wireless patient monitoring
system for pressure ulcer/injury prevention. Leaf is highly
complementary to our pressure ulcer treatment portfolio including
ALLEVYN Life dressings and SECURA skin care products, allowing us
to offer hospitals a solution for the prevention and treatment of
pressure ulcers and injuries.
Outlook
Our full year outlook for underlying revenue growth in the 3%-4%
range and a 20-70bps improvement in Trading profit margin remains
unchanged.
On a reported basis, we expect 2017 revenue growth to be in the
range of 1.6%-2.6% based on prevailing exchange rates at the end of
April and reflecting the 80bps headwind from the disposal of the
Gynaecology business.
Over the last few years we have successfully put in place the
right structures and capabilities to make the Group stronger,
simpler, more agile and efficient. We continue to focus on
execution and expect to see progress through the year.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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