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RNS Number : 9546H
Smith & Nephew Plc
30 March 2020
Statement on COVID-19 impact
30 March 2020
Smith+Nephew (LSE:SN, NYSE:SNN), the global medical technology
business, today announces that the full year financial guidance
issued on 20 February 2020, which assumed a normalisation of the
COVID-19 outbreak early in the second quarter, is withdrawn due to
the rapid expansion of the virus beyond China.
Overall it is too early to determine the consequent impact of
the COVID-19 pandemic on our business. In China elective procedures
have restarted, but currently remain considerably below
pre-outbreak levels. In Europe and the US a range of policy
responses are now being implemented, including stopping all but the
most urgent surgical procedures . It is difficult to determine how
long the situation will last, the speed of normalisation
thereafter, and the timing of catch-up of postponed procedures.
Given this ongoing uncertainty, we will not update 2020 guidance
until the effect of COVID-19 becomes clearer.
First quarter trading results will be reported on 6 May 2020. We
expect that underlying revenue growth(1) for the first quarter will
be around -8% down on the first quarter of last year. We also
expect that second quarter revenue and first half trading margin
will be substantially down on the prior year.
In February Smith+Nephew initiated actions to realise
significant savings from areas such as travel, events, advertising,
promotion and consultancy, as well as freezing all but the most
crucial new hires and slowing some planned capital expenditure.
Smith+Nephew has a strong balance sheet with access to
significant liquidity. As of 31 December 2019, the Group had net
debt of $1.6 billion (excluding lease liabilities) compared to
committed facilities of $2.9 billion, as well as a further $550
million of Senior Notes which will be drawn down in June 2020.
Roland Diggelmann, Chief Executive Officer of Smith+Nephew,
said:
"Our immediate focus is the well-being of employees, and to
continue to support patients and medical practitioners. We remain
actively engaged in our communities. We are supporting employees
with healthcare experience who wish to volunteer to return to front
line care and using our R&D and manufacturing expertise to
support the fight against COVID-19."
"Looking beyond the immediate future, Smith+Nephew operates in
attractive markets with excellent growth fundamentals. We are
financially strong with a proven strategy and unique portfolio. Our
major manufacturing and distribution facilities are all active and
we are ready to meet pent-up demand when the time comes."
This announcement includes inside information as defined in
Article 7 of the Market Abuse Regulation No. 596/2014.
The person responsible for arranging the release of this
announcement on behalf of Smith+Nephew is Susan Swabey, Company
Secretary.
- ends -
Enquiries
Investors
Andrew Swift +44 (0) 1923 477433
Smith+Nephew
Media
Charles Reynolds +44 (0) 1923 477314
Smith+Nephew
Susan Gilchrist / Ayesha Bharmal +44 (0) 207404 5959
Brunswick
Notes
1. 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 2019 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.
About Smith+Nephew
Smith+Nephew is a portfolio medical technology business that
exists to restore people's bodies and their self-belief by using
technology to take the limits off living. We call this purpose
'Life Unlimited'. Our 17,500+ employees deliver this mission every
day, making a difference to patients' lives through the excellence
of our product portfolio, and the invention and application of new
technologies across our three global franchises of Orthopaedics,
Advanced Wound Management and Sports Medicine & ENT.
Founded in Hull, UK, in 1856, we now operate in more than 100
countries, and generated annual sales of $5.1 billion in 2019.
Smith+Nephew is a constituent of the FTSE100 (LSE:SN, NYSE:SNN).
The terms 'Group' and 'Smith+Nephew' are used to refer to Smith
& Nephew plc and its consolidated subsidiaries, unless the
context requires otherwise.
For more information about Smith+Nephew, please visit
www.smith-nephew.com and follow us on Twitter , LinkedIn ,
Instagram or Facebook .
Forward-looking Statements
This document may contain forward-looking statements that may or
may not prove accurate. For example, statements regarding expected
revenue growth and trading margins, market trends and our product
pipeline are forward-looking statements. Phrases such as "aim",
"plan", "intend", "anticipate", "well-placed", "believe",
"estimate", "expect", "target", "consider" and similar expressions
are generally intended to identify forward-looking statements.
Forward-looking statements involve known and unknown risks,
uncertainties and other important factors that could cause actual
results to differ materially from what is expressed or implied by
the statements. For Smith+Nephew, these factors include: economic
and financial conditions in the markets we serve, especially those
affecting health care providers, payers and customers; price levels
for established and innovative medical devices; developments in
medical technology; regulatory approvals, reimbursement decisions
or other government actions; product defects or recalls or other
problems with quality management systems or failure to comply with
related regulations; litigation relating to patent or other claims;
legal compliance risks and related investigative, remedial or
enforcement actions; disruption to our supply chain or operations
or those of our suppliers; competition for qualified personnel;
strategic actions, including acquisitions and dispositions, our
success in performing due diligence, valuing and integrating
acquired businesses; disruption that may result from transactions
or other changes we make in our business plans or organisation to
adapt to market developments; and numerous other matters that
affect us or our markets, including those of a political, economic,
business, competitive or reputational nature. Please refer to the
documents that Smith+Nephew has filed with the U.S. Securities and
Exchange Commission under the U.S. Securities Exchange Act of 1934,
as amended, including Smith+Nephew's most recent annual report on
Form 20-F, for a discussion of certain of these factors. Any
forward-looking statement is based on information available to
Smith+Nephew as of the date of the statement. All written or oral
forward-looking statements attributable to Smith+Nephew are
qualified by this caution. Smith+Nephew does not undertake any
obligation to update or revise any forward-looking statement to
reflect any change in circumstances or in Smith+Nephew's
expectations.
Trademark of Smith+Nephew. Certain marks registered US Patent
and Trademark Office.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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