Smith & Nephew plc (LON:SN, NYSE:SNN) today announced results for the Quarter and Year to 31 December 2018:
|
Reported |
Trading2 |
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|
31 Dec |
31 Dec |
Reported |
31 Dec |
31 Dec |
Underlying |
|||||||
|
2018 |
2017 |
growth |
2018 |
2017 |
growth |
|||||||
|
|
$m |
|
$m |
|
% |
|
$m |
|
$m |
|
% |
|
|
Fourth Quarter Results1 |
||||||||||||
|
Revenue |
1,294 |
1,278 |
1 |
1,294 |
1,278 |
3 |
||||||
|
Full Year Results1 |
||||||||||||
|
Revenue |
4,904 |
4,765 |
3 |
4,904 |
4,765 |
2 |
||||||
|
Operating/trading profit |
863 |
934 |
1,123 |
1,048 |
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|
Operating/trading profit margin (%) |
17.6 |
19.6 |
22.9 |
22.0 |
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|
Cash generated from operations/trading cash flow |
1,108 |
1,273 |
951 |
940 |
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|
EPS/ EPSA (cents) |
76.0 |
87.8 |
100.9 |
94.5 |
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Namal Nawana, Chief Executive Officer of Smith & Nephew, said:
“We accelerated performance across 2018, with 3% underlying revenue growth in both the third and fourth quarters and a 7% uplift in full year trading profit. We start 2019 with a strengthened organisation and a new growth-oriented operating model.”
2018 Full Year Financial Highlights1,2
· Underlying revenue up 2% and trading profit margin up 90bps to 22.9%, in line with guidance
o Reported revenue growth of 3% is after +1% FX impact
o Trading profit margin includes 50bps benefit from one-off legal settlement
o Operating profit margin reflects restructuring costs of $120m, with c.$60m of benefits realised in 2018
· Performance improved across the year, with revenue growth 1% in H1 and 3% in H2
· Strong growth in Reconstruction and Emerging Markets (China growth double-digit), offset by continued softness in Arthroscopic Enabling Technologies and Advanced Wound Bioactives
· Cash conversion ratio 85%; significant balance sheet capacity with 0.8x net debt to adjusted EBITDA ratio
· Tax rate on trading results down 100bps to 16.1%, including provision release (15.1% reported tax rate)
· EPSA up 7% to 100.9¢, reflecting improved trading and lower tax rate (EPS down 13% to 76.0¢ after restructuring and other non-trading costs)
· Full year dividend up 3% to 36.0¢ per share
Strategic Highlights
· New operating model complete from 1 January 2019, led by strengthened leadership team
· Five new strategic imperatives to drive value creation over the medium term established
2019 Guidance1
· Revenue expected to increase 2.5-3.5% underlying (around 1.8-2.8% reported3)
· Trading profit margin expected in 22.8-23.2% range, a 40-80bps improvement excluding one-off 2018 legal gain
· Tax rate on trading results expected to be 19-21%
Analyst conference call
An analyst meeting and conference call to discuss Smith & Nephew’s results for the year ended 31 December 2018 will be held today, Thursday 7 February 2019 at 8.30am GMT / 3.30am EST. This will be webcast live and available for replay shortly after. The details can be found on the Smith & Nephew website at www.smith-nephew.com/results
