TIDMCTEC
RNS Number : 1879L
ConvaTec Group PLC
12 May 2022
12 May 2022
ConvaTec Group Plc
AGM trading update for the four months ended 30 April 2022
Good start to 2022 - No change to guidance
Further strategic progress achieved
ConvaTec Group Plc ("ConvaTec" or the "Group"), a global medical
solutions company, today announces a trading update for the four
months ended 30 April 2022. Group revenue increased by 4.1% on a
reported basis, up 7.5% on a constant currency basis and up 6.0% on
an organic basis [1] . ConvaTec has made a good start to the year
with good underlying growth in each of its four categories in line
with our expectations.
In Advanced Wound Care we achieved mid-single digit organic
revenue growth overall, with a strong performance in Global
Emerging Markets, good performance in Europe and stable performance
in North America.
In Ostomy Care, organic revenue growth was low-single digit.
Good growth in ConvaTec products, particularly in the Global
Emerging Markets, was partially offset by further planned SKU
rationalisation including at our UK AmCare business. Overall we are
improving the mix and consequently the margins.
Our Continence and Critical Care category achieved low-single
digit organic revenue growth. We achieved mid-single digit organic
growth in Continence Care, driven by the recovery in new patient
starts coupled with a good performance from the Cure portfolio.
This was moderated by a slightly negative performance within our
Critical Care category. This was anticipated given the strong
performance in 2021 when there was high demand owing to
COVID-19.
Infusion Care continued to deliver strong double-digit organic
revenue growth. The performance was driven by continued high levels
of demand for our differentiated infusion sets used in Automated
Insulin Delivery systems.
Strategic decision to exit from hospital care
Consistent with the Group's FISBE
(Focus-Innovate-Simplify-Build-Execute) strategy and following a
strategic review of the Critical Care business, today ConvaTec
announces it will be withdrawing from its hospital care activities
[2] and related industrial sales [3] during the remainder of 2022.
These low margin activities being exited, generated $ 101 m of
revenue in 2021.
The hospital care and industrial sales production at the Group's
sites will be phased out over the remainder of the year. Given the
geopolitical situation in the region, it has become increasingly
difficult for the Group to continue manufacturing in Belarus;
therefore, the factory there, which manufactures products almost
entirely for hospital care, will close on 31 May 2022.
Given this phased exit of the hospital care and related
industrial sales products, reported revenue in 2022 is expected to
be approximately $ 20-30 m lower than 2021 and adjusted EBIT is
expected to reduce by $3-5m. There is also expected to be a one-off
adjusted P&L charge of approximately $55m, which will be
incurred in 2022, and a cash cost of approximately $25m arising
mainly in 2022.
Following the exit of Hospital Care, Convatec will be almost
entirely focused on higher-growth chronic care markets with
improved margins and higher levels of recurring revenue.
Additional strategic progress
On 14 March we completed the acquisition of Triad Life Sciences
enabling us to enter the large and rapidly growing wound biologics
segment [4] (see RNS dated 28 January 2022). The Triad team,
current portfolio and product pipeline have now transitioned to be
part of our Advanced Wound Care business and the name has been
changed to ConvaTec Advanced Tissue Technologies. The integration
is progressing well including payment of the first $25m milestone
(triggered by the effective date of the new reimbursement code for
the InnovaMatrix FS product).
In March we launched Gentle Cath(TM) Air Male in France. The
product is a compact version of our Gentle Cath(TM) brand, that
incorporates our proprietary Feel Clean(TM) technology, designed
for discretion and enhanced user experience. Although still early
days the initial reaction from healthcare providers and consumers
has been positive.
On 9 May we announced we had invested $30m in BlueWind Medical,
an innovative developer of the RENOVA iStim implantable tibial
neuromodulation device. Neuromodulation is a cutting-edge treatment
for overactive bladder conditions. The investment supports
ConvaTec's FISBE strategy by securing a relationship with a company
developing an innovative solution for the US continence market.
Full Year Guidance
We continue to expect organic revenue growth of between 4.0% and
5.5% and a constant currency EBIT margin of at least 18%. Our
expectations for inflation have increased, with COGS inflation now
estimated at approximately 8-9% (previously expected 5%). However,
we are managing these cost challenges by driving our simplification
and efficiency agenda, leveraging our pricing center of excellence
and proactively managing our mix. Consequently, our full year 2022
guidance is unchanged.
Our growth prospects are attractive and are underpinned by
continued improvement in execution and a more robust new product
pipeline. Please join us at our Technology & Innovation event
on 17 May at 2pm to learn more about our innovation pipeline and
capabilities. If you would like to receive the webcast details
please email IR@Convatec.com
***
Contacts
Analysts & Investors Kate Postans, Vice President of +44 (0) 7826 447807
Investor Relations & Corporate ir@convatec.com
Communications
Buchanan: Charles Ryland / Chris
Media Lane +44 (0)207 466 5000
About ConvaTec
ConvaTec is a global medical products and technologies company
focused on solutions for the management of chronic conditions, with
leading market positions in advanced wound care, ostomy care,
continence and critical care, and infusion care. Our products
provide a range of clinical and economic benefits including
infection prevention, protection of at-risk skin, improved patient
outcomes and reduced total cost of care. To learn more about
ConvaTec, please visit www.convatecgroup.com
[1] Organic growth is calculated by applying the applicable
prior period average exchange rates to the Group's actual
performance in the respective period and excluding acquired and
disposed/discontinued businesses.
[2] The higher margin highly differentiated Flexi-Seal(TM) FMS
portfolio of products in Critical Care will be retained (2021
Revenue: $77m).
[3] These Industrial Sales previously featured in Infusion Care
category given B2B in nature. (2021 Revenue: $22m)
[4] SmartTRAK Wound Biologics segment includes skin substitutes,
active collagen dressings and topical drug delivery
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END
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(END) Dow Jones Newswires
May 12, 2022 02:01 ET (06:01 GMT)
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