TIDMCTEC
RNS Number : 9073F
ConvaTec Group PLC
10 November 2022
10 November 2022
Convatec Group Plc
Trading update for the ten months ended 31 October 2022
Good sales growth sustained Organic growth guidance increased
for 2022
Convatec Group Plc ("Convatec" or the "Group"), a global medical
products and technologies company, today announces a trading update
for the ten months ended 31 October 2022. Group revenue increased
by 2.4% on a reported basis (H1: 3.6%) impacted by foreign exchange
movements. On a constant currency basis revenue was up 7.8% (H1:
8.0%) and was up 6.3% on an organic basis(1) (H1: 6.4%). Following
sustained good sales growth, guidance for 2022 organic revenue
growth has been increased to 5.4% to 5.8% (previously 4.0% to
5.5%.)
In Advanced Wound Care, organic revenue growth was high
single-digit for the first 10 months, broadly in line with the
first half year. In North America the limited position in foam
continued to impact performance ahead of the launch of ConvaFoam in
Q4. The strong performance in Global Emerging Markets and good
performance in Europe continued.
In Ostomy Care, organic revenue growth was low single-digit for
the first 10 months, as expected and consistent with the first half
year. Good growth in Convatec products was achieved, particularly
in the Global Emerging Markets. The growth in Europe and North
America continued to be impacted by planned rationalization,
leading to improvements in mix and consequently margin.
In Continence and Critical Care, organic revenue growth for the
first 10 months was mid single-digit, in line with the first half
year. The growth in Continence Care improved in the second half
with better supply chain management. The organic growth in the
critical care component (which is only the Flexi-seal(TM) portfolio
following the exit of hospital care), declined in the second half.
This was as expected, given it is against strong COVID-19 driven
comparatives.
In Infusion Care, organic revenue growth was double-digit for
the first 10 months, slightly lower than in the first half year.
Underlying demand for our infusion sets remains strong and we
continue to expect at least high single-digit growth for the full
year. Growth in the remainder of the year will be lower reflecting
the order phasing and strong demand seen year to date.
Strategic progress over the last 4 months
The exit from Hospital Care and related industrial sales is
proceeding as planned. As previously indicated, we closed our
Belarus plant on 31 May 2022 and the related production at other
sites will cease by the end of this year.
The integration of Triad Life Sciences and our entry into the
attractive wound biologics segment(2) is progressing well. It is
still early days but we are pleased with the performance. Following
the new reimbursement code for the InnovaMatrix FS product and the
recent regulatory clearance of the InnovaMatrix powder product, we
have now paid both of the two $25 million transaction
milestones.
In the spring we started launching Gentle Cath(TM) Air Male in
France and the UK to enter the large and rapidly growing compact
segment in Europe; with performance in line with expectations.
Furthermore, we are on track to start launching ConvaFoam in the
USA this quarter.
We continue to strengthen Convatec's position by effectively
executing our FIBSE strategy and will update the market further at
the Capital Markets Event on 17(th) November.
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 SmartTRAK Wound Biologics segment includes skin substitutes,
active collagen dressings and topical drug delivery
Full year guidance updated
Given the sustained good sales growth so far this year, we now
expect organic revenue growth for 2022 to be between 5.4% and 5.8%
(previously 4-5.5%.)
Inflation in raw materials and freight has moderated in recent
months, but inflation in utilities and labour has increased.
Overall, we continue to expect COGS inflation of 8-9% for the year
and we continue to expect to deliver constant currency adjusted
operating profit margin of at least 18%.
Foreign exchange rate movements have been volatile in recent
months. The FX impact on 2022 is currently estimated to be a 6%
headwind on revenue growth with a 90bps tailwind to the EBIT
margin. These estimates are based on actual rates to 31 October and
spot rates for the remainder of the year. On this basis, we expect
to publish an adjusted operating profit margin of over 19%.
***
Contacts
Analysts & Kate Postans, Vice President +44 (0) 7826
Investors of Investor 447807
Relations & Corporate Communications ir@convatec.com
Buchanan: Charles Ryland / +44 (0)207 466
Media Chris Lane 5000
Details about our Capital Markets Event - 17(th) November
2022
Convatec will be hosting a Capital Markets Event for sell-side
analysts and institutional holders on Thursday, 17 November 2022 at
2:00pm. The event will be held at The Auditorium - UBS, 5
Broadgate, London, EC2M 2QS
Presentations from CEO Karim Bitar, CFO Jonny Mason and other
members of Convatec's Executive Leadership Team
(CELT) will provide insight into:
-- FISBE strategy
-- Markets and future growth opportunities
-- Plans on how the company will deliver its medium-term
targets
Places are limited so if you would like to attend in-person
please contact IR@convatec.com. The event will also be webcast
live.
About Convatec
Pioneering trusted medical solutions to improve the lives we
touch: Convatec is a FTSE 100 global medical products and
technologies company, focused on solutions for the management of
chronic conditions, with leading positions in advanced wound care,
ostomy care, continence and critical care, and infusion care. Group
revenues in 2021 were over $2 billion. With around 10,000
colleagues, we provide our products and services in over 100
countries, united by a promise to be forever caring. Our products
provide a range of benefits, from infection prevention and
protection of at-risk skin, to improved patient outcomes and
reduced care costs. To learn more about Convatec, please visit
http://www.convatecgroup.com
Forward Looking Statements
This document includes certain forward-looking statements with
respect to the operations, performance and financial condition of
the Group. Forward-looking statements are generally identified by
the use of terms such as "believes", "estimates", "aims",
"anticipates", "expects", "intends", "plans", "predicts", "may",
"will", "could", "targets", continues", or their negatives or other
similar expressions. These forward-looking statements include all
matters that are not historical facts.
Forward-looking 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 that are
difficult to predict and many of which are outside the Group's
control. As such, no assurance can be given that such future
results, including guidance provided by the Group, will be
achieved. Forward-looking statements are not guarantees of future
performance and such uncertainties and contingencies, including the
factors set out in the "Principal Risks" section of the Strategic
Report in our Annual Report and Accounts, could cause the actual
results of operations, financial condition and liquidity, and the
development of the industry in which the Group operates, to differ
materially from the position expressed or implied in the
forward-looking statements set out in this document. Past
performance of the Group cannot be relied on as a guide to future
performance.
Forward-looking statements are based only on knowledge and
information available to the Group at the date of preparation of
this document and speak only as at the date of this document. The
Group and its directors, officers, employees, agents, affiliates
and advisers expressly disclaim any obligations to update any
forward-looking statements (except to the extent required by
applicable law or regulation).
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END
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