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Contact Us Convatec Argentina Argentina Belize Belize Brasil Brasil Canada (English) Canada (English) Canada (Français) Canada (Français) Chile Chile Colombia Colombia Costa Rica Costa Rica Curaçao Curaçao El Salvador El Salvador Ecuador Ecuador Guatemala Guatemala Guyana Guyana Honduras Honduras Jamaica Jamaica México México Nicaragua Nicaragua Panamá Panamá Perú Perú Puerto Rico Puerto Rico República Dominicana República Dominicana Suriname Suriname Venezuela Venezuela United States (English) United States (English) België België Bosna i Hercegovina Bosna i Hercegovina Česko Česko Danmark Danmark Deutschland Deutschland Eesti Eesti España España France France Hrvatska Hrvatska Ireland Ireland Ísland Ísland Italia Italia Latvija Latvija Lietuva Lietuva Magyarország Magyarország Malta Malta Nederland Nederland Norge Norge Polska Polska Portugal Portugal România România Schweiz (Deutsch) Schweiz (Deutsch) Suisse (Français) Suisse (Français) Slovenija Slovenija Slovensko Slovensko Srbija Srbija Suomi Suomi Sverige Sverige Türkiye Türkiye United Kingdom United Kingdom Österreich Österreich Ελλάδα Ελλάδα България България Македонија Македонија Россия Россия Україна Україна South-Africa South-Africa ישראל ישראל الأردن الأردن الإمارات العربية المتحدة الإمارات العربية المتحدة البحرين البحرين المملكة العربية السعودية المملكة العربية السعودية ایران ایران پاکستان پاکستان عُمان عُمان قطر قطر لبنان لبنان مصر مصر العراق العراق الكويت الكويت Australia Australia Hong Kong SAR Hong Kong SAR 中国香港 中国香港 India India Indonesia Indonesia Malaysia Malaysia New Zealand New Zealand Philippines Philippines Singapore Singapore Việt Nam Việt Nam ไทย ไทย 대한민국 대한민국 中国 中国 中国台湾 中国台湾 日本 日本

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Improving growth trend in second quarter, Transformation Initiative on track, guidance confirmed.

Key points:

  • Group reported revenue of $888.9 million in the first half was 3.5% lower year on year and flat1 on an organic basis;
    • Excluding the one-off rebate provision6 taken in the first quarter ($8.9 million) to revise the estimate of the distributor rebates accrual, growth in the first half was 1.0%on an organic basis;
    • The second quarter saw an improving revenue trend, with positive organic revenue growth across all franchises and Group growth of 2.1%1;
  • Transformation Initiative on track: three-year programme, $150 million investment (including c.$45 million capex), anticipated gross benefits in 2021 of $130 – $150 million per annum;
    • $14 million cost in first half;
    • Operational Excellence programme delivered net positive productivity in the first half, with benefits more than offsetting inflation and depreciation;
  • Reported operating profit / EBIT of $93.6 million, 23.3% lower year on year, reflecting the one-off rebate provision6, foreign exchange, plus investment in commercial areas and regions, and the Transformation Initiative;
  • Adjusted2 operating profit / EBIT of $165.2 million, 18.8% lower year on year, due to same drivers as above; adjusted2 EBIT margin declined, as expected, to 18.6% (2018: 22.1%);
  • Interim dividend 1.717 cents maintained;
  • Leverage 2.6 times Net Debt/EBITDA3, continued good adjusted cash conversion 89.8% (2018: 75.2%);
  • Guidance for the full year maintained: organic revenue growth 1.0% - 2.5%1, adjusted EBIT2 margin 18% - 20%, including c. $40 million Transformation Initiative and c. $10 million of MDRcosts.

 

 

Rick Anderson, Executive Chairman, commented

“All of our Franchises delivered organicrevenue growth in the second quarter, indicating positive progress against our performance improvement plans. There is more work to do, but we are well positioned to deliver on our objectives for the full year and consequently our revenue and adjusted EBIT margin guidance is maintained. Throughout the second half of the year, our priority remains improving execution. In addition, I look forward to welcoming Karim Bitar as our new CEO on 30 September.

We expect to see further revenue growth for the Group in the second half. A key focus area is our US Wound business, where a more targeted and effective salesforce is already showing encouraging signs. Ostomy is continuing to deliver a slow but steady recovery, and within Continence and Critical Care our Home Distribution Group (HDG) continues to outgrow the market in the US, albeit at a lower rate. Infusion Devices saw strong orders from customers in the second quarter.

Our Transformation Initiative has made good progress in many areas, but there is much more to do. Launched in February, we invested $14 million in the first half to establish the programme, identify opportunities and begin execution of the first wave of projects, with detailed tracking of key milestones and weekly reviews by the Executive team. Our Transformation Office provides a model to embed more discipline and better execution into the business: initial progress is encouraging and a “Convatec Way” is emerging.

We expect a significant increase in transformation spend in the second half, in line with previous guidance of $40 million spend for the year, as more projects move from planning into execution. We will continue to “forward invest” for growth and efficiency, to enable us to capture more opportunities for value creation over the medium to long term for all our stakeholders.”

(...)

Download the full text of this announcement and Analyst Presentation 

 

Enquiries

 
Analysts and Investors 
                                                                                                                     

investorrelations@convatec.com

John Crosse, VP Investor Relations

+44 (0)7500 141435

Mark Reynolds, Director Investor Relations

+44 (0)7551 036625


Media


mediarelations@convatec.com

Bobby Leach, VP Group Corporate Affairs                      

+44 (0)7770 842226

Finsbury

+44 (0)207 2513801

 

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