08 March 2022
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Topline momentum, profit1,2 growth and continued strategic progress
Pivoting to sustainable and profitable growth
- Good financial performance in 2021: strong revenue growth and broadly stable constant currency margin resulting in attractive EPS growth - underpinning an inaugural dividend increase
- Continued progress executing our FISBE (Focus, Innovate, Simplify, Build, Execute) strategy:
- Strengthened the continence business, within CCC, through Cure Medical and Patient Care Medical acquisitions and divestment of non-core lower-margin incontinence activities
- Revenues in our top 12 markets grew 7.9% on a constant currency1,3 basis during 2021
- Launched innovative and differentiated Extended Wear Infusion Set in Europe, continued progress advancing our product pipeline and introduced a new and consistent product development/launch process across the Group. Invested $95 million in R&D (+15%)
- Embedded Marketing Centre of Excellence (‘CoE’), established Quality CoE and began to leverage the benefits of Salesforce and Pricing CoEs which were established in 2020
- Additional progress since the year-end with agreement to enter the attractive Wound Biologics4 segment with proposed acquisition of Triad Life Sciences, expected to complete in March
FY 2021 key financial highlights
- Strong revenue growth: +7.6%, +5.8% on a constant currency3 basis and +5.3% on an organic5 basis
- Driven by strong growth in Advanced Wound Care and Infusion Care and modest growth in Ostomy Care and CCC (comprising of good growth in the continence business moderated by stable performance in critical care products)
- Total revenue growth supported by the Cure Medical and Patient Care Medical acquisitions partially offset by impact of non-core skin care and incontinence divestments (incremental $10 million)
- Adjusted EBIT1,2 performance improved: +3.3% and +5.4% on a constant currency3 basis
- Constant currency adjusted EBIT2,3 margin of 18.4% in line with guidance. Profitability reflected continued investment, foreign exchange and inflationary headwinds. Adjusted4 EBIT margin of 17.7% (2020: 18.5%).
- Reported operating profit was $204 million (2020: $211 million). Year on year change principally reflecting foreign exchange, continued investment, higher amortisation of acquired intangibles and acquisition and divestiture related costs.
- Improved earnings momentum: adjusted1 diluted EPS +8.3%. Reported diluted EPS +3.5%
- Strengthened balance sheet: despite significant strategic investments, leverage was reduced to 1.9x net debt1/adjusted EBITDA1 (2020: 2.0x).
- Inaugural dividend increase: Proposed final DPS of 4.154 cents to raise FY DPS by 3.0% to 5.871 cents
- For 2022, we expect to achieve sustained organic5 revenue growth of between 4.0-5.5%. Notwithstanding the inflationary backdrop we currently expect constant currency adjusted2,3 EBIT margin to increase to at least 18% compared to 17.7% in 2021.
Karim Bitar, Chief Executive Officer, commented:
“Convatec’s competitive position and financial performance continues to strengthen as we successfully execute our FISBE strategy. Our performance in 2021 demonstrates we are now pivoting to sustainable and profitable growth – with good revenue and earnings momentum. During 2021 we made significant operational improvements and grew our portfolio through strategic M&A – enabling us to deliver more effectively for our customers. I want to thank all my Convatec colleagues for their efforts over the past 12 months enabling us to deliver, at pace, our key initiatives despite the constantly changing backdrop. The Board is confident in the future prospects of the Group and is proposing an increase in the full year dividend of 3%.
“Convatec expects to grow revenue in line or faster than the markets in which we operate, which are growing at approximately 4%. There is still work ahead; however, I am confident in Convatec’s significant growth prospects.”
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Analysts and Investors
Kate Postans: Vice President of Investor Relations & Corporate Communications
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Buchanan: Charles Ryland / Chris Lane
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