Smith+Nephew plc (LON:SN, NYSE:SNN) has provided the following 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, Smith & Nephew 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.”
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.
