a7078m
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 under the
Securities Exchange Act of 1934
May 01,
2024
Commission
File Number 001-14978
SMITH & NEPHEW plc
(Registrant’s
name)
Building 5, Croxley Park, Hatters Lane
Watford, England, WD18 8YE
(Address
of principal executive office)
Indicate
by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F.
Form
20-F a
Form 40-F
__
Smith+Nephew First Quarter 2024 Trading Update
Solid start to 2024, reinforcing confidence in full year
outlook
1 May 2024
Smith+Nephew (LSE:SN, NYSE:SNN) trading update for the first
quarter ended 30 March 2024.
Highlights1,2
● Q1
revenue $1,386 million (2023: $1,356 million), up 2.9% on an
underlying basis, and 2.2% on a reported basis including a -70bps
foreign exchange headwind
o Growth
in-line with expected 2024 phasing and included one less trading
day year-on-year, representing approximately a 1.5 percentage point
headwind in the quarter
● Orthopaedics
revenue up 4.4% underlying
o Good
growth across Hip and Knee Implants outside the US, Other
Reconstruction and Trauma & Extremities driven by 12-Point Plan
improvements
o Continued
weakness in US Hip and Knee Implants against tough comparator
period. Product supply has improved; new leadership driving sharper
commercial execution
● Sports
Medicine & ENT revenue up 5.5% underlying
o Robust
performance from Sports Medicine Joint Repair supported by
prior-year product launches and expansion of
REGENETEN◊
o Continued
headwind from China
● Advanced
Wound Management revenue down -2.0% underlying
o Sustained
good growth from Advanced Wound Devices offset by Advanced Wound
Bioactives decline due to expected SANTYL◊ volatility following
the strong Q4 2023
● Full
year 2024 guidance unchanged
o Underlying
revenue growth expected in the range of 5.0% to
6.0% (4.3%
to 5.3% reported),
and trading profit margin expected to be at least
18.0%
o Continued
cadence of product launches and clinical evidence contributing to
growth
Deepak Nath, Chief Executive Officer, said:
"Revenue growth in the first quarter was driven by solid
performance in our Orthopaedics and Sports Medicine & ENT
businesses, partially offset by some anticipated softness in
Advanced Wound Management.
"Our 12-Point Plan is on-track and the progress in Orthopaedics was
again evident from the strong growth across most segments, and we
expect the remainder to improve as the year
progresses.
"We are confident in our outlook and look forward to all three of
our business units contributing as we deliver another year of
strong revenue growth."
Enquiries
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Investors
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Katharine Rycroft
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+44 (0) 7811 270734
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Smith+Nephew
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Media
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Charles Reynolds
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+44 (0) 1923 477314
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Smith+Nephew
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Susan Gilchrist / Ayesha Bharmal
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+44 (0) 20 7404 5959
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Brunswick
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Analyst conference call
An analyst conference call to discuss Smith+Nephew's first quarter
results will be held at 8.30am BST / 3.30am EDT on Wednesday 1 May
2024, details of which can be found on the Smith+Nephew website
at https://www.smith-nephew.com/en/who-we-are/investors.
Notes
1.
All numbers given are for the quarter ended 30 March 2024 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 2023 period.
'Underlying
revenue growth' reconciles to reported revenue growth, the most
directly comparable financial measure calculated in accordance with
IFRS, by making two adjustments, the 'constant currency exchange
effect' and the 'acquisitions and disposals effect', described
below.
The
'constant currency exchange effect' is a measure of 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 the current year revenue translated into
US Dollars at the current year average exchange rate and the prior
revenue translated at the prior year rate; and 2) the
increase/decrease being measured by translating current and prior
year revenues into US Dollars using the prior year closing
rate.
The
'acquisitions and disposals effect' is the measure of 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 includes
acquisitions and excludes 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. These
sales are separately tracked in the Group's internal reporting
systems and are readily identifiable.
Forward calendar
Results for the first half of 2024 will be released on 1 August
2024.
First quarter trading update
Our first quarter revenue was $1,386 million (2023: $1,356
million), up 2.9% on an underlying basis, in-line with our expected
growth phasing for 2024. Reported revenue growth was 2.2%
reflecting a -70bps headwind from foreign exchange.
As previously guided, the first quarter revenue growth rate
reflected the tough US comparator from the strong start to 2023
across our surgical businesses and one less trading day
year-on-year, representing
approximately a 1.5 percentage point headwind in the quarter. The
first quarter 2024 comprised 63 trading days.
Consolidated revenue analysis for the first quarter
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30 March
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1 April
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Reported
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Underlying
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Acquisitions
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Currency
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2024
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2023
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growth
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growth(i)
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/disposals
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impact
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Consolidated revenue by business unit by product
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$m
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$m
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%
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%
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%
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%
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Orthopaedics
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567
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548
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3.6
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4.4
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-
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-0.8
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Knee
Implants
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239
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237
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1.0
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1.7
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-
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-0.7
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Hip
Implants
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155
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152
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2.1
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3.4
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-
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-1.3
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Other Reconstruction(ii)
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27
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23
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17.3
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18.0
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-
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-0.7
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Trauma
& Extremities
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146
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136
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7.3
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7.8
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-
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-0.5
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Sports Medicine & ENT
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441
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422
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4.5
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5.5
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-
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-1.0
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Sports
Medicine Joint Repair
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244
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228
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6.8
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7.7
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-
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-0.9
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Arthroscopic
Enabling Technologies
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149
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149
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-
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1.0
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-
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-1.0
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ENT
(Ear, Nose and Throat)
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48
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45
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7.9
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9.0
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-
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-1.1
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Advanced Wound Management
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378
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386
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-2.3
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-2.0
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-
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-0.3
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Advanced
Wound Care
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174
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175
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-0.9
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-0.5
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-
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-0.4
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Advanced
Wound Bioactives
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123
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136
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-9.7
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-9.8
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-
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0.1
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Advanced
Wound Devices
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81
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75
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8.1
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8.7
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-
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-0.6
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Total
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1,386
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1,356
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2.2
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2.9
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-
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-0.7
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Consolidated revenue by geography
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US
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733
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737
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-0.6
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-0.6
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-
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-
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Other Established Markets(iii)
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420
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404
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4.0
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4.8
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-
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-0.8
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Total Established Markets
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1,153
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1,141
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1.0
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1.3
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-
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-0.3
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Emerging
Markets
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233
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215
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8.5
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11.6
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-
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-3.1
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Total
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1,386
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1,356
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2.2
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2.9
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-
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-0.7
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(i)
Underlying growth is defined in Note 2 on page 2
(ii)
Other Reconstruction includes robotics capital sales, our joint
navigation business and cement
(iii)
Other Established Markets are Australia, Canada, Europe, Japan and
New Zealand
Overview of the first quarter
Mid-single digit growth from Orthopaedics and Sports Medicine &
ENT was partially offset by a decline in Advanced Wound Management
in the first quarter. In Orthopaedics, we continued to benefit
from 12-Point Plan improvements, including in product supply, and
drove good growth across all segments with the exception of Hip and
Knee Implants in the US, where we lapped against a tough comparator
period. There remains a significant opportunity to improve our
performance in US Hips and Knees, with new leadership driving
sharper commercial execution. In Sports Medicine & ENT, solid
growth in Sports Medicine Joint Repair and ENT was offset by a
slower quarter in Arthroscopic Enabling Technologies. Advanced
Wound Management's small revenue decline reflected expected SANTYL
volatility following the strong finish to 2023.
Geographically, Established Markets grew 1.3% (1.0% reported), with
the US down -0.6%
(-0.6% reported) reflecting the strong comparator period. Revenue
from Other Established Markets was up 4.8% (4.0% reported).
Emerging Markets delivered strong growth of 11.6%
(8.5% reported).
By business unit, Emerging Markets growth was led by strong
double-digit growth in Orthopaedics.
We continued to successfully execute our 12-Point Plan, and have
made demonstrable
progress in product and set availability and have markedly
increased our customer satisfaction scores. Our manufacturing
optimisation programme is on track. Recently launched products are
contributing to growth across the business, and we are increasing
the pace of cross-business unit deals into Ambulatory Surgical
Centers (ASCs).
Orthopaedics
Our Orthopaedics business unit delivered revenue growth of
4.4% (3.6% reported) in the quarter.
Knee Implants was
up 1.7% (1.0% reported), led
by our JOURNEY II◊ Knee
System and partial knee portfolio. Hip
Implants was
up 3.4% (2.1% reported) led
by our POLAR3◊ Total
Hip Solution.
Outside the US we delivered a strong quarterly performance
following improved product supply and commercial execution driven
by the 12-Point Plan, with 10.9% growth
(9.4% reported) in Knee Implants and 10.1% growth (7.0% reported)
in Hip Implants.
In the US, Knee Implants declined -5.0% (-5.0% reported) and Hip
Implants -1.9%
(-1.9% reported) against a strong comparator period. Product supply
and set availability have now also improved in the US and the new
leadership team is focused on delivering sharper commercial
execution in this market. We remain confident that we are on the
right path to deliver better growth in this last underperforming
area of Orthopaedics.
Other Reconstruction revenue
was up 18.0% (17.3% reported), including strong growth from our
CORI◊ Surgical
System. We are benefitting from CORI's unique features and
versatility, including being the only system with a digital
tensioner, an application for revision knee surgery and both
robotics-assisted burring and saw bone-cutting
options.
Trauma & Extremities was
up 7.8% (7.3% reported), with good growth driven
by the EVOS◊ Plating
System. During the quarter we announced full commercial
availability of the new AETOS◊ Shoulder
System in the US, along with 510(k) clearance for its use with
ATLASPLAN◊ 3D
Planning Software and Patient Specific Instrumentation. AETOS
addresses one of the fastest growing segments in Orthopaedics and
the early customer reaction has been very
positive.
Sports Medicine & ENT
Our Sports Medicine &
ENT business unit
delivered underlying revenue growth of 5.5% (4.5% reported) in the
quarter. Excluding China, where the sector is adjusting to the
upcoming VBP programme, Sports Medicine & ENT grew 6.7% (6.2%
reported). China will remain a headwind to growth for this business
unit across 2024 as VBP is implemented, which is due to start in
May 2024.
Revenue in Sports Medicine Joint
Repair was up 7.7% (6.8%
reported). Performance was led by our shoulder
repair portfolio, including double-digit growth from our
REGENETEN◊ Bioinductive
Implant. We
announced new evidence showing REGENETEN reducing full-thickness
rotator cuff re-tear rates by 68%. We are at the early stages of
introducing REGENETEN to augment Achilles repair with good early
customer feedback.
During the quarter we also showcased our newly acquired
CARTIHEAL◊ AGILI-C◊ Cartilage
Repair Implant at the AAOS Annual Meeting. CARTIHEAL AGILI-C and
REGENETEN demonstrate our leadership in products that enable
biological healing for Sports Medicine and improve patient outcomes
versus the current standard of care.
Arthroscopic Enabling Technologies revenue
was up 1.0% (0.0% reported),
with a good quarter in COBLATION◊ and
patient positioning offset by softness in video capital sales
caused by a third-party supply issue which is now
resolved.
Since the start of the year we have initiated two
new sponsorships to promote our Sports Medicine business, being
named as the Preferred Sports Medicine Technology Partner of UFC,
the world's premier mixed martial arts organisation, and
undertaking a logo-sponsorship of players during high profile
matches at The Championships, Wimbledon.
ENT delivered
revenue growth of 9.0% (7.9% reported), led by our tonsil and
adenoid business. We are in the early stages of launching the
ARIS◊ COBLATION
Turbinate Reduction Wand. This utilises Smith+Nephew's advanced
COBLATION Plasma Technology to provide a minimally invasive way to
reduce hypertrophic turbinates, a condition that requires 350,000
procedures per annum in the US.
Advanced Wound Management
Advanced Wound Management revenue
declined -2.0% (-2.3% reported).
Advanced Wound Care revenue
was down -0.5% (-0.9% reported), with good growth from our
foam dressings and infection management portfolios offset by
negative growth in skin care and films. In April we announced
new evidence supporting ALLEVYN◊ LIFE
Foam Dressing's role in pressure injury
prevention.
Advanced Wound Bioactives revenue
was down -9.8% (-9.7% reported), driven by the expected
SANTYL volatility following the strong Q4 2023, as well as
reflecting a strong comparator period from Q1
2023.
Advanced Wound Devices revenue
was up 8.7% (8.1% reported), led by good growth from our single-use
PICO◊ Negative
Pressure Wound Therapy Systems. During the quarter, the UK National
Institute for Health and Care Excellence (NICE) reconfirmed its
guidance supporting the use of PICO for closed surgical incisions
in patients who are at high risk of surgical site infections. In
April we announced the US launch of RENASYS◊ EDGE
Negative Pressure Wound Therapy System. RENASYS
EDGE brings an important new option to customers looking for
enhanced intuitiveness, simplicity and durability, especially
important for home-care settings.
Outlook
We remain confident in our full year guidance for 2024, which is
unchanged. We expect to deliver underlying revenue growth in the
range of 5.0% to 6.0% (4.3% to 5.3% based
on exchange rates prevailing on 26 April 2024) and a trading profit
margin of at least 18.0%.
As in prior years, we expect the trading profit margin to be higher
in the second half than in the first half of the year, although
with a less marked step-up than in 2023. We expect the first half
trading profit margin to be around 75 to 125 bps ahead of the first
half of 2023.
About Smith+Nephew
Smith+Nephew is a portfolio medical technology business focused on
the repair, regeneration and replacement of soft and hard tissue.
We exist to restore people's bodies and their self-belief by using
technology to take the limits off living. We call this purpose
'Life Unlimited'. Our 18,000 employees deliver this mission every
day, making a difference to patients' lives through the excellence
of our product portfolio, and the invention and application of new
technologies across our three global business units of
Orthopaedics, Sports Medicine & ENT and Advanced Wound
Management.
Founded in Hull, UK, in 1856, we now operate in more than 100
countries, and generated annual sales of $5.5 billion in 2023.
Smith+Nephew is a constituent of the FTSE100 (LSE:SN, NYSE:SNN).
The terms 'Group' and 'Smith+Nephew' are used to refer to Smith
& Nephew plc and its consolidated subsidiaries, unless the
context requires otherwise.
For more information about Smith+Nephew, please visit www.smith-nephew.com and
follow us on X, LinkedIn, Instagram or Facebook.
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 profit 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: conflicts
in Europe and the Middle East, economic and financial conditions in
the markets we serve, especially those affecting healthcare
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 and financial
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 disposals, 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; relationships with healthcare professionals;
reliance on information technology and cybersecurity; disruptions
due to natural disasters, weather and climate change related
events; changes in customer and other stakeholder sustainability
expectations; changes in taxation regulations; effects of foreign
exchange volatility; 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, which is available on the SEC's website at www. sec.gov, 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 in US Patent and
Trademark Office.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
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Smith & Nephew plc
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(Registrant)
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Date:
May 01, 2024
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By:
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/s/
Helen Barraclough
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Helen
Barraclough
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Company
Secretary
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