TIDMCTEC
RNS Number : 5323R
ConvaTec Group PLC
30 October 2019
Trading Update for the three months ended 30 September 2019
30 October 2019 (LSE: CTEC)
Trading in the third quarter for ConvaTec Group Plc ("the
Group"), a leading global medical products and technologies
company, was in-line with management expectations and full year
guidance remains unchanged.
Key Points:
-- Group revenue for the three months to 30 September 2019 was
$462.9 million, 2.4% higher on a reported basis and 4.6%(1) higher
on an organic basis compared with the prior year, in part
reflecting the benefits of some short-term tailwinds. For the 9
months to 30 September 2019 revenue was $1,351.8 million, a decline
of 1.6% on a reported basis due to foreign exchange movements, but
growth of 1.5%(1) on an organic basis, compared with the prior
year.
-- Franchise Q3 summary:
o Advanced Wound Care: organic growth of 3.6%(1) was driven by
our silver portfolio, in particular AQUACEL(TM) Ag+, and foam,
whilst distributor inventory movements provided a short-term
tailwind which will partly reverse in Q4;
o Ostomy Care: organic growth of 3.0%(1) reflected a solid
underlying performance against a weak 2018 performance;
o Continence and Critical Care: organic growth of 8.0%(1) was
flattered, as expected, by a weaker prior year comparator due to
the packaging recall, along with continued growth in our Home
Distribution Group (HDG);
o Infusion Devices: organic growth of 4.3%(1) reflected a weaker
prior year comparator.
-- Transformation Initiative on track.
-- FY 2019 guidance unchanged.
Q3 2019 Q3 2018 Q3 Reported Q3 Organic 9 months
Reported Reported growth % growth %(1) organic
$'m $'m growth %(1)
----------------------- ---------- ---------- ------------ --------------
Advanced Wound Care 147.5 146.8 0.5 3.6 Flat
Ostomy Care 131.7 131.4 0.2 3.0 0.8
Continence & Critical
Care 115.1 107.5 7.0 8.0 4.2
Infusion Devices 68.6 66.5 3.2 4.3 1.9
Total revenue 462.9 452.2 2.4 4.6 1.5
Karim Bitar, Chief Executive Officer, commented:
"I am excited to have joined ConvaTec and returned to the
healthcare sector. Since I joined the Group at the end of September
I have had the opportunity to visit several sites and engage with
many colleagues; I have been encouraged by their enthusiasm and the
potential within ConvaTec.
I am pleased we have reported a solid performance in Q3, but
this is a small step on the significant journey ahead of us as we
focus on pivoting to sustainable and profitable growth. As an
organisation we need to get closer to patients, to strengthen our
innovation pipeline and to drive a relentless focus on execution
excellence.
I look forward to giving an update on our plans and progress
next year."
Group revenue
Group revenue of $462.9 million grew 4.6%(1) on an organic basis
in Q3, compared with the prior year. Due to unfavourable foreign
exchange movements, on a reported basis Group revenue grew
2.4%.
For the 9 months to 30 September 2019 Group revenue was $1,351.8
million, a decline of 1.6% on a reported basis, again due to
unfavourable foreign exchange, but growth of 1.5%(1) on an organic
basis.
In Advanced Wound Care, revenue of $147.5 million increased
3.6%(1) on an organic basis in Q3, a decent performance driven by
our silver portfolio, in particular AQUACEL(TM) Ag+, and foam. A
number of markets in EMEA and Latin America performed well, while
we continued to focus on leveraging our specialised and expanded
salesforce in the US. There were some distributor inventory
movements in the current and prior year which provided a tailwind
in the quarter, which we anticipate will partly reverse in Q4.
In Ostomy Care, revenue of $131.7 million grew by 3.0%(1) on an
organic basis in Q3, a solid underlying performance albeit set
against a weaker performance in 2018. The quarter also benefitted
from the timing of a tender in Latin America.
In Continence & Critical Care, revenue of $115.1 million
grew by 8.0%(1) on an organic basis in Q3, driven by a good
performance in Continence Care, primarily HDG. Critical and
Hospital Care benefitted from a weaker prior year comparator, a
result of the packaging recall which was instigated in the third
quarter of last year, reducing the drag on growth from these
businesses in the quarter.
In Infusion Devices revenue of $68.6 million increased 4.3%(1)
year on year on an organic basis in Q3, driven by a good level of
customer orders and a weaker prior year comparator.
The Transformation Initiative remains on track as we continue to
implement the improvement projects and we will provide an update on
progress with the FY19 results.
On 24 October 2019 the Group successfully completed a
refinancing of the debt put in place at the time of the IPO in
October 2016. The debt outstanding under this arrangement of
approx. $1.6 billion term debt and an undrawn $200 million
revolving credit facility has been replaced with a committed 5-year
bank facility of a $1.5 billion term debt and a $200 million
revolving credit facility, on more favourable terms overall.
As announced on 19 August, Dr. John McAdam has been appointed as
Chairman of the Board and he assumed his position on 30 September
2019.
Outlook and guidance
The outlook for the Group for FY 2019 is unchanged:
-- Organic revenue growth of 1.0% to 2.5%(1)
-- Adjusted EBIT margin 18% to 20%, including spend associated
with the Transformation Initiative and Medical Device Regulation
(MDR). Excluding these costs, adjusted EBIT margin is expected to
be 21.0% to 22.5%.
There will be a webcast for analysts & investors today at
09:00 GMT which can be accessed via the ConvaTec website
www.convatecgroup.com/investors/reports/. A recording will be
available on the site shortly afterwards.
There is also a conference call facility:
-- Telephone number: UK + 44 20 3936 2999; US + 1 646 664 1960
-- Passcode: 447057
Enquiries:
Analysts and Investors
John Crosse, VP Investor Relations +44 (0)7500 141 435
Mark Reynolds, Director Investor
Relations
investorrelations@convatec.com +44 (0)7551 036 625
Media
Buchanan
Charles Ryland/Chris Lane/Vicky
Hayns +44 (0)207 466 5000
convatec@buchanan.uk.com
Revenue by Geography
Q3 2019 Q3 2018 Reported Organic growth(1)
Reported Reported growth % %
$'m $'m
--------------- ---------- ---------- ----------
Americas 247.0 231.9 6.5 7.1
EMEA 179.8 184.6 (2.6) 1.9
APAC 36.1 35.7 1.1 2.2
Total revenue 462.9 452.2 2.4 4.6
Foreign exchange rates
Q3 2019 Average Q3 2018 Average
--------- ---------------- ----------------
USD/GBP 1.23 1.30
USD/EUR 1.11 1.16
About ConvaTec
ConvaTec is a global medical products and technologies company
focused on therapies for the management of chronic conditions, with
leading market positions in advanced wound care, ostomy care,
continence and critical care, and infusion devices. 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 where a copy of this
announcement can also be found.
Forward Looking Statements
This document includes statements that are, or may be deemed to
be, "forward looking statements". These forward-looking statements
involve known and unknown risks and uncertainties, many of which
are beyond the Group's control. "Forward-looking statements" are
sometimes identified by the use of forward-looking terminology,
including the terms "believes", "estimates", "aims" "anticipates",
"expects", "intends", "plans", "predicts", "may", "will", "could",
"shall", "risk", "targets", forecasts", "should", "guidance",
"continues", "assumes" or "positioned" or, in each case, their
negative or other variations or comparable terminology. These
forward-looking statements include all matters that are not
historical facts. They appear in a number of places and include,
but are not limited to, statements regarding the Group's
intentions, beliefs or current expectations concerning, amongst
other things, results of operations, financial condition,
liquidity, prospects, growth, strategies and dividend policy of the
Group and the industry in which it operates.
By their nature, forward-looking statements involve risks and
uncertainties because they relate to events and depend on
circumstances that may or may not occur in the future. These
statements are necessarily based upon a number of estimates and
assumptions that, while considered reasonable by the Company, are
inherently subject to significant business, economic and
competitive uncertainties and contingencies. As such, no assurance
can be given that such future results, including guidance provided
by the Group, will be achieved; actual events or results may differ
materially as a result of risks and uncertainties facing the Group.
Such risks and uncertainties could cause actual results to vary
materially from the future results indicated, expressed, or implied
in such forward-looking statements. Forward-looking statements are
not guarantees of future performance and the actual results of
operations, financial condition and liquidity, and the development
of the industry in which the Group operates, may differ materially
from those made in or suggested by the forward-looking statements
set out in this Presentation. Past performance of the Group cannot
be relied on as a guide to future performance. Forward-looking
statements speak only as at the date of this document and the
Company and its directors, officers, employees, agents, affiliates
and advisers expressly disclaim any obligations or undertaking to
release any update of, or revisions to, any forward-looking
statements in this document.
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END
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