Smith & Nephew plc : Smith & Nephew | Smith & Nephew First Quarter 2012 Results
05/03/2012| 05:59am US/Eastern
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Smith & Nephew plc (LSE: SN, NYSE: SNN), the global
medical technology business, announces its results for the
first quarter ended 31 March 2012.
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3 Months* to
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31 Mar
2012
$m
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Underlying
change
%
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2 Apr
2011
$m
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Revenue1
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1,079
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3
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1,055
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Trading profit2
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252
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5
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241
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Operating profit2
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236
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231
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Trading margin (%)
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23.3
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50bps
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22.8
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EPSA (cents)3
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19.5
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18.4
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EPS (cents)
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18.0
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17.5
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Divisional revenue1
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Advanced Surgical Devices global
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839
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3
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823
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Advanced Wound Management global
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240
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5
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232
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* Q1 2012 comprised 64 trading days (2011 - 64 trading
days)
Q1 Financial Highlights
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Revenue $1,079 million, up 3% on an underlying
basis
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Trading profit was $252 million, up 5% on an
underlying basis
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Trading profit margin of 23.3%, up 50 bps
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EPSA was up 6% to 19.5¢
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Net debt at $28 million, down from $351 million a
year ago
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Strong revenue, profit and trading profit margin
performance from both Advanced Surgical Devices and
Advanced Wound Management
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Continued good growth in Knee Implants and momentum
in Negative Pressure Wound Therapy
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Further progress delivering against each of our five
strategic priorities
Commenting on Q1, Olivier Bohuon, Chief Executive
Officer of Smith & Nephew, said:
"Smith & Nephew has had a good first quarter.
We grew revenue, increased profit and improved our trading
profit margin. We saw the first results of our actions to
make Smith & Nephew more fit and effective.
"2012 is a critical year for implementing our new
strategic priorities. Our plans to progress the structural
changes, additional investments and, of course, greater
efficiencies, are now underway. Throughout Smith &
Nephew, at every level, there is a clear sense of direction,
as we work to reshape the Group for future
growth."
Analyst presentation and conference call
An analyst presentation and conference call to discuss Smith &
Nephew's first quarter and preliminary results will be held
at 8.30am GMT/3.30am EST today, 3 May. This will be
broadcast live on the company's website and will be
available on demand shortly following the close of the call at
http://www.smith-nephew.com/Q112.
A podcast will also be available at the same address. If
interested parties are unable to connect to the web, a
listen-only service is available by calling +44(0)20 3364 5381
(passcode 6423551) in the UK or +1646 254 3365 (passcode
6423551) in the US. Analysts should contact Jennifer
Heagney on +44 (0) 20 7960 2255 or by email at
jennifer.heagney@smith-nephew.com
for conference details.
Notes
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Unless otherwise specified as 'reported' all
revenue increases/decreases throughout this document are
underlying increases/decreases after adjusting for the
effects of currency translation. See note 4 to the
financial statements for a reconciliation of these measures
to results reported under IFRS.
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A reconciliation from operating profit to trading
profit is given in note 5 to the financial
statements. The underlying increase in trading profit
is the increase in trading profit after adjusting for the
effects of currency translation.
-
Adjusted earnings per ordinary share ('EPSA')
growth is as reported, not underlying, and is stated before
restructuring and rationalisation costs, amortisation of
acquisition intangibles and taxation thereon. See
note 2 to the financial statements.
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All numbers given are for the quarter ended 31 March
2012 unless stated otherwise.
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References to market growth rates are estimates
generated by Smith & Nephew based on a variety of
sources.
Enquiries
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Investors
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Phil Cowdy
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+44 (0) 20 7401 7646
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Smith & Nephew
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Media
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Charles Reynolds
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+44 (0) 20 7401 7646
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Smith & Nephew
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Andrew Mitchell / Justine McIlroy
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+44 (0) 20 7404 5959
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Brunswick
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First Quarter Results
Smith & Nephew delivered a good financial performance in
the first quarter of 2012, increasing revenue to $1,079
million, representing 3% growth on an underlying and 2% on a
reported basis year-on-year.
Both our Advanced Surgical Devices ("ASD")
and Advanced Wound Management ("AWM") global
divisions grew revenue, profit and trading profit margins in
the quarter.
Product highlights included 6% growth in revenue from
our global Knee Implant franchise and another strong quarter
from our Negative Pressure Wound Therapy ("NPWT")
portfolio. We believe that we have now taken around 20%
of the European NPWT market.
Consistent with our strategic priorities, we are now
providing geographic growth data for both our Established
Markets (US, Europe, Canada, Japan, Australia and New
Zealand), where we increased revenue by 2% in the quarter,
and our Emerging and International Markets, which were 12%
ahead. In the BRIC countries we delivered revenue
growth in excess of 20%.
Our trading profit was $252 million, up 5% from $241
million in 2011. This was ahead of expectations,
resulting in a Group trading profit margin of 23.3%, 50 bps
ahead of last year. This improvement is in part a
reflection of the actions we are taking to reshape Smith &
Nephew beginning to take effect, although there is also a
benefit from some cost phasing which will reverse in
Q2.
The net interest charge for the period was $2
million. The tax rate for the quarter, and estimated
effective rate for the full year, was 30.1% on profit before
restructuring and rationalisation costs and amortisation of
acquisition intangibles. Adjusted attributable profit
of $174 million is before these items and taxation
thereon.
Adjusted earnings per share was 19.5¢ (97.5¢ per
American Depositary Share, "ADS") compared to 18.4¢
last year. Basic earnings per share was 18.0¢ (90.0¢
per ADS) (2011: 17.5¢).
Trading cash flow (defined as cash generated from
operations less capital expenditure, but before restructuring
and rationalisation costs and legal settlement) was $192
million in the quarter, reflecting a trading profit to cash
conversion ratio of 76%. Net debt decreased to $28
million from $351 million a year ago.
As previously announced, in February we reached
settlements with the U.S. Securities and Exchange Commission
and U.S. Department of Justice in connection with their
investigation of the medical device industry, and paid $22
million in fines and profit disgorgement. The Group had
previously provided for this payment in Q4 2011.
Progress Delivering Against Strategic Priorities
In our Q4 and Full Year statement in February we gave
details of the actions we had taken in 2011 to deliver against
our strategic priorities and reshape Smith & Nephew to be fit
and effective for the future. We have made further
progress in the first quarter of 2012.
For instance, we continue to invest in improving
efficiency, and have commenced a significant Process
Optimisation project in Europe. Our operations here have a
diverse range of processes and IT systems. This multi-year
project will develop common processes across our business,
supported by a single transactional and reporting system, to
enable faster, and better informed, decision making.
The Group also invested further to support our
strategic priority to be market leaders across the BRIC
nations. This included strengthening our Emerging
Markets team with the appointment of a new General Manager
for Brazil and senior operations and logistics personnel, and
we established a new headquarters for our Emerging Markets
and International Markets teams in Dubai.
We opened a new innovation and training centre in
Memphis, which we will use to deliver best-in-class surgeon
training programmes. This is a multi-disciplinary
facility, including implant, trauma and sports medicine,
reflecting our belief that there is much to be gained by more
closely sharing learning and innovation between
specialisms. We also enjoyed a successful American
Academy of Orthopaedic Surgeons Annual Meeting in San
Francisco, launching a number of new products and
successfully demonstrating the breadth of our portfolio to a
wide range of customers.
Finally, the Group has also been delivering on our
priority to supplement and support organic growth through
acquisition. In the period we added a number of small
complementary technologies such as the acquisition of
biomechanical company LifeModeler, whose software shortens
the time taken to develop new products using a virtual model
of the human body. Similarly, the purchase of the
ADERMA
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