2015 Third Quarter Trading Report and acquisition of Blue Belt Holdings, Inc

Transcription

1 2015 Third Quarter Trading Report and acquisition of Blue Belt Holdings, Inc

2 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; litigation relating to patent or other claims; legal compliance risks and related investigative, remedial or enforcement actions; 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. 2

3 Third Quarter Trading Report

4 Q3 revenue growth of 4% underlying Regional growth Revenue split Product franchise growth Sports Medicine Joint Repair 4% 4% US Arthroscopic Enabling Tech Trauma & Extremities Other Surgical -2% 2% 10% Knees 6% 1% Est OUS Hips -2% AWC 6% 8% Emerging AWB AWD 2% 17% 0% 4% 8% 12% -5% 5% 15% Underlying change (%) Underlying change (%) Note: Est OUS is Australia, Canada, Europe, Japan and New Zealand, Other Surgical includes Gynaecology and ENT, 4

5 Sports Medicine, Trauma & Other Surgical Revenue performance Sports Medicine Joint Repair +4% ($143m) Arthroscopic Enabling Technologies (AET) -2% ($132m) Trauma & Extremities +2% ($122m) Other Surgical Businesses* +10% ($50m) Commentary double digit growth in US Joint Repair; softness in China COBLATION technology strong growth ENT portfolio developed with launch of NASASTENT RAPID RHINO NASASTENT Dissolvable Nasal Dressing * Other Surgical Businesses includes Gynaecology and ENT 5

6 Reconstruction Revenue performance Knees: global +6%, US +5%, OUS +8% ($205m) Hips: global -2%, US -1%, OUS -2% ($137m) Commentary Global Reconstruction grew at +3% JOURNEY II delivered strong growth and ZUK Uni Knee is ahead of plan flat hip growth excluding BHR headwinds ZUK Unicompartmental High Flex Knee 6

7 Advanced Wound Management Revenue performance Advanced Wound Care +6% ($188m) Advanced Wound Bioactives +2% ($84m) Advanced Wound Devices +17% ($44m) Commentary good AWC trends continue with strong US contribution continued impact of OASIS reimbursement change on AWB growth strong PICO growth ALLEVYN Life Foam Dressings 7

8 Acquisition of Blue Belt Holdings, Inc 8

9 Blue Belt Technologies and Navio system Blue Belt Technologies is a leader in the fast-growing area of robotic-assisted surgical technologies Navio surgical system provides robotics-assistance and CT-free intra-operative visualisation, offering clinical benefits include high degree of implant placement accuracy along with soft-tissue balancing ease of use through hand-held robot and system portability attractive economics for customers Navigation camera + proprietary computer cart Video demonstration: y-uni-knee-featuring-blue-belt-s-roboticsassisted-navio-surgical-system Robotic-controlled handpiece 9

10 Complementary Products and Pipeline Blue Belt Technologies What Smith & Nephew brings Current offering Navio System STRIDE Uni Knee Most successful partner JOURNEY Uni, ZUK Global reach R&D programme Total knee arthroplasty Revision knee Bi-cruciate retaining knee Established compatible products Clinical and marketing strength JOURNEY II for BCR in development Medium-term opportunities Total hip arthroplasty Sports medicine Deep customer base and expertise 10

11 Acquisition Financials $275m* acquisition financed from existing debt facilities Strong revenue growth from current products 2015 revenue c. $19 million expect growth in excess of 50% in the medium-term significant upside as new products launched Financial impact R&D investment will dilute trading profit margin by 60bps in 2016 becoming profitable in 2018 ROCE will exceed cost of capital in fourth full year of ownership Straight-forward integration *Subject to any closing adjustments 11

12 Guidance and Summary 12

13 Guidance and foreign exchange Guidance 2015 guidance maintained Foreign exchange Sustained strength of US dollar Translational impact: full year revenue headwind expected of 8% Transactional impact: 2015: Hedging strategy largely mitigates impact on margin 2016: Gross margin headwind of up to 100 basis points, partly offset by measures to optimise gross profit Group Optimisation and ArthroCare synergies continue to plan 13

14 Summary Q performance 4% underlying revenue growth full year guidance maintained Blue Belt Technologies positions Smith & Nephew as a leader in the fast-growing area of robotic-assisted surgical technologies. reinforces our distinctive Recon strategy 14

15 Questions 15

16 Appendices

17 Revenue growth reconciliation Q (1) YTD 2015 (1) Growth % Growth % Underlying 4% Underlying 4% Acquisitions 1% Acquisitions 4% CER (2) 5% CER (2) 8% Currency -9% Currency -8% Reported -4% Reported 0% (1) Q comprises 63 trading days ( trading days) YTD comprises 187 days ( days) (2) Constant exchange rates 17

18 Franchise revenue analysis Q1 Q2 Q3 Q Full Year Q1 Q2 Q3 Growth Growth Growth Growth Growth Growth Growth Revenue Growth % % % % % % % $m % Sports Medicine, Trauma & OSB Sports Medicine Joint Repair Arthroscopic Enabling Technologies (2) (1) (2) (2) Trauma & Extremities (1) Other Surgical Businesses* Reconstruction Knee Implants Hip Implants (1) (2) Advanced Wound Management - - (1) (2) (1) Advanced Wound Care (6) (8) (3) (1) (4) Advanced Wound Bioactives Advanced Wound Devices 13 1 (17) (27) (9) (27) (9) Group ,105 4 All revenue growth rates are on an underlying basis * Other Surgical Businesses includes Gynaecology and ENT 18

19 Regional revenue analysis Geographic regions Q1 Q2 Q3 Q Full Year Q1 Q2 Q3 Growth Growth Growth Growth Growth Growth Growth Revenue Growth % % % % % % % $m % US (2) Other Established Markets 1 (3) (2) (1) (1) (2) Established Markets (1) Emerging Markets Group ,105 4 Other Established Markets is Australia, Canada, Europe, Japan and New Zealand. All revenue growth rates are on an underlying basis 19

20 Business days per quarter Q1 Q2 Q3 Q4 Full Year

21 Exchange rates Q3/14 FY/14 Q1/15 Q2/15 Q3/15 $: Period end Average $: Period end Average

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