SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of
1934
November 2, 2023
Commission
File Number 001-14978
SMITH & NEPHEW plc
(Registrant's
name)
Building 5, Croxley Park,
Hatters Lane, Watford, Hertfordshire, WD18 8YE,
England
(Address
of registrant's principal executive offices)
[Indicate
by check mark whether the registrant files or will file
annual
reports
under cover Form 20-F or Form 40-F.]
Form
20-F
X
Form 40-F
---
---
[Indicate
by check mark if the registrant is submitting the Form 6-K
in
paper
as permitted by Regulation S-T Rule 101(b)(1).]
Yes
No X
---
---
[Indicate
by check mark if the registrant is submitting the Form 6-K
in
paper
as permitted by Regulation S-T Rule 101(b)(7).]
Yes
No X
---
---
[Indicate
by check mark whether by furnishing the information
contained
in this
Form, the registrant is also thereby furnishing information to
the
Commission
pursuant to Rule 12g3-2 (b) under the Securities Exchange Act
of
1934.]
Yes
No X
---
---
If
"Yes" is marked, indicate below the file number assigned to
the
registrant
in connection with Rule 12g3-2 (b) : 82- n/a.
Smith+Nephew Third Quarter 2023 Trading Report
Encouraging progress as 12-Point Plan actions drive revenue
growth
2 November 2023
Smith+Nephew (LSE:SN, NYSE:SNN) trading update for the third
quarter ended 30 September 2023.
Q3 Highlights1,2
●
Q3
revenue of $1,357 million (2022: $1,250 million), representing
underlying revenue growth of 7.7%. Reported growth of 8.5% included
an 80bps FX tailwind
●
Orthopaedics
revenue up 8.3%, in part as product launches and 12-Point Plan-led
improvements drove higher growth from Trauma &
Extremities
●
Sports
Medicine & ENT revenue up 11.1%, with continued good growth
across most markets offsetting weakness in China
●
Advanced
Wound Management revenue up 3.6%, with double-digit growth from our
negative pressure portfolio but a slower quarter from Advanced
Wound Bioactives
2023 Full Year
Outlook1,2
●
Underlying
revenue growth currently expected to be towards the higher end of
guided range of 6.0% to 7.0%
●
Trading
profit margin now expected to be around 17.5%, reflecting headwinds
from China
Chief Financial Officer
●
John
Rogers, former Chief Financial Officer of WPP plc, announced as
Chief Financial Officer-designate with effect from 1 December
2023
●
See
separate announcement issued today for further
information
Deepak Nath, Chief Executive Officer, said:
"We saw strong growth in the third quarter, continuing the momentum
from the first half of the year. Performance was broad-based, and I
am particularly pleased by the step-up in Orthopaedics as we start
to see the real impact from our improving execution under the
12-Point Plan.
"Our investment in innovation continues to bear fruit. During the
quarter we saw the first surgery with our new AETOS◊ Shoulder
System and launched
our leading REGENETEN◊ Bioinductive
Implant in India and Japan. We are gearing up for the imminent
launch of our RENASYS◊ EDGE
negative pressure wound therapy in the US.
"Overall, I am encouraged that our actions to transform
Smith+Nephew to a consistently higher growth company are starting
to deliver."
Enquiries
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Investors
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Andrew Swift
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+44 (0) 1923 477433
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Smith+Nephew
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Media
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Charles Reynolds
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+44 (0) 1923 477314
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Smith+Nephew
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Susan Gilchrist / Ayesha Bharmal
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+44 (0) 20 7404 5959
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Brunswick
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Analyst conference call
A conference call to discuss Smith+Nephew's third quarter results
will be held today at 8.30am GMT / 4.30am EDT, details of which are
available at https://www.smith-nephew.com/en/about-us/investors#quarterly-reporting.
Forward calendar
The full year results will be released on 27 February
2024.
Notes
1. All
numbers given are for the quarter or nine months ended 30 September
2023 unless stated otherwise.
2. 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 2022 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
year 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.
Third quarter 2023 trading update
Our third quarter revenue was $1,357 million (2022: $1,250
million), representing underlying revenue growth of 7.7%. Reported
revenue growth was 8.5% including an 80bps foreign exchange
tailwind. Q3 2023 comprised 63 trading days, in line with the
comparable Q3 period in 2022.
Orthopaedics revenue was up 8.3% (8.8% reported), Sports Medicine
& ENT up 11.1% (11.3% reported), and Advanced
Wound Management up 3.6% (5.4% reported).
Revenue growth in our Established Markets was 7.4% (9.0% reported).
Within this, in the US,
our largest market, we delivered 7.2% revenue
growth (7.2%
reported). Other
Established Markets revenue was up 7.8% (12.7%
reported).
Emerging Markets revenue was up 9.2% (6.4% reported). Within this,
China was a headwind as a weaker quarter in Sports Medicine offset
a return to growth in Hip and Knee Implants as we fully lapped the
impact of Volume Based Procurement (VBP). Sports Medicine was
impacted as the Chinese healthcare system experienced a slowdown in
capital sales and procedure volumes, as well as by a more specific
headwind as our distributors reduced inventory in anticipation of
VBP in this segment.
12-Point Plan update
We continued to make good progress in the quarter delivering on our
12-Point Plan to fundamentally change the way we operate and
transform business performance. Through the 12-Point Plan we are
working to fix performance in our Orthopaedics business and improve
our overall productivity, while continuing to invest behind our
well-performing Advanced Wound Management and Sports Medicine &
ENT business units.
In Orthopaedics, our actions to improve commercial execution and
product availability are starting to deliver clear returns. Trauma
accelerated over the first half, particularly in the US, building
on our investments over several years to complete the
EVOS◊ Plating
System, and the work under the 12-Point Plan to deploy more
instrument sets to drive implant pull-through. We continue to make
progress along a similar improvement path with our Hip and Knee
Implants business and expect improving results to follow in the
coming quarters.
We are also making progress in our productivity workstreams, for
instance with our Orthopaedics network optimisation programme. We
have announced the closure of two smaller facilities, consolidating
production into our larger sites, and also reduced the size of our
contingent workforce.
In Advanced Wound Management, we have consistently driven strong
growth from our negative pressure wound therapy ('NPWT') business
and are at the early stages of rolling out the new RENASYS EDGE
NPWT System, preparing for the US launch. RENASYS EDGE brings an
important new option to customers looking for enhanced
intuitiveness, simplicity and durability, especially important for
home-care settings.
We also continued to invest behind our Sports Medicine portfolio,
for instance launching our REGENETEN Bioinductive Implant in India
and Japan. Through REGENETEN we have built a leading position in
regenerative medicine and, with more than 100,000 procedures
completed globally, have had a transformative impact on the way
surgeons approach rotator cuff procedures.
Consolidated revenue analysis for the third quarter
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30 September
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1 October
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Reported
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Underlying
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Acquisitions
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Currency
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2023
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2022
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growth
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growth(i)
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/disposals
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impact
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Consolidated revenue by business unit by product
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$m
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$m
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%
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%
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%
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%
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Orthopaedics
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536
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492
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8.8
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8.3
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-
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0.5
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Knee
Implants
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223
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210
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6.3
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5.7
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-
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0.6
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Hip
Implants
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141
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136
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3.5
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3.5
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-
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-
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Other Reconstruction(ii)
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29
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18
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61.7
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58.5
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-
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3.2
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Trauma
& Extremities
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143
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128
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11.1
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10.4
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-
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0.7
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Sports Medicine & ENT
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425
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382
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11.3
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11.1
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-
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0.2
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Sports
Medicine Joint Repair
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232
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209
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11.4
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11.3
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-
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0.1
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Arthroscopic
Enabling Technologies
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134
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131
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2.1
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1.7
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-
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0.4
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ENT
(Ear, Nose and Throat)
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59
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42
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39.1
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40.2
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-
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-1.1
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Advanced Wound Management
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396
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376
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5.4
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3.6
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-
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1.8
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Advanced
Wound Care
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183
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173
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5.9
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3.2
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-
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2.7
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Advanced
Wound Bioactives
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130
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136
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-4.4
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-4.8
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-
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0.4
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Advanced
Wound Devices
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83
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67
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23.8
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21.3
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-
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2.5
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Total
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1,357
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1,250
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8.5
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7.7
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-
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0.8
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Consolidated revenue by geography
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US
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719
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671
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7.2
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7.2
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-
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-
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Other Established Markets(iii)
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385
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341
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12.7
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7.8
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-
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4.9
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Total Established Markets
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1,104
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1,012
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9.0
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7.4
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-
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1.6
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Emerging
Markets
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253
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238
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6.4
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9.2
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-
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-2.8
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Total
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1,357
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1,250
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8.5
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7.7
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-
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0.8
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(i)
Underlying growth is defined in Note 2 on page 2
(ii)
Other Reconstruction includes robotics capital sales, our joint
reconstruction business and cement
(iii)
Other Established Markets are Europe, Canada, Japan, Australia and
New Zealand
Orthopaedics
In our Orthopaedics business unit, revenue was up 8.3% (8.8%
reported). Knee
Implants grew 5.7% (6.3%
reported), with performance driven by our JOURNEY
II◊ Total
Knee System with its proprietary OXINIUM◊ bearing
surface, even though we experienced some supply constraints in the
US where revenue declined by -1.3%. Our work to improve product
availability and to deploy greater numbers of instrument sets is
ongoing, with progress starting to come through as we exited the
quarter. Hip Implants grew 3.5% (3.5% reported) with the
POLAR3◊ Total
Hip Solution, with its class-leading survivorship data, delivering
good growth in the quarter. In the US, Hip Implants grew by
3.6%. Other
Reconstruction revenue
grew 58.5% (61.7% reported) driven by our robotics-assisted
CORI◊ Surgical
System, with more than 25% of US knee procedures utilising the
system by quarter end. We have expanded CORI's indications and
added functionality in recent quarters and use in revision
surgeries, a unique capability, is approaching the overall
utilisation. The first procedures with the new saw solution were
performed in the quarter, with CORI being the only solution to
offer robotics-assisted burring and saw bone-cutting
options. Trauma &
Extremities grew 10.4%
(11.1% reported), with a strong US performance led by the EVOS
Plating System. The launch of the new AETOS Shoulder System is
underway, with first surgeries completed in the US in the
quarter.
Sports Medicine & ENT
Our Sports Medicine &
ENT business unit
delivered revenue growth of 11.1% (11.3% reported) in the quarter
despite the softness in China noted earlier. Within
this, Sports Medicine Joint
Repair delivered 11.3%
(11.4% reported) revenue growth, with a good quarter across
shoulder, led by the REGENETEN Bioinductive Implant, and knee
repair. Arthroscopic Enabling
Technologies revenue was
up 1.7% (2.1% reported). Revenue from ENT was up 40.2% (39.1% reported), reflecting
the continued recovery in tonsil and adenoid procedure volumes and
the clearance of backorders following our actions to improve
product availability.
Advanced Wound Management
Our Advanced Wound
Management business unit
delivered revenue growth of 3.6% (5.4%
reported). Advanced Wound
Care revenue was up 3.2%
(5.9% reported), including good growth in
Europe. Advanced Wound
Bioactives revenue was
down -4.8% (-4.4% reported), reflecting a strong comparator.
Additionally, there were temporary delays to
SANTYL◊ shipments
as we completed the transfer of production to our Fort Worth
facility in the US, and delivery was back to normal levels by
quarter-end. Advanced Wound
Devices revenue was up
21.3% (23.8% reported), with double-digit growth from both our
traditional RENASYS◊ NPWT
System and PICO◊ Single-Use
NPWT System.
2023 full year outlook
With one quarter remaining of 2023, we currently expect our
underlying revenue growth for the full year to be towards the
higher end of our guided range of
6.0% to 7.0% (around
5.0% to 6.0% on a reported basis based on exchange rates prevailing
on 27 October 2023). Relative to third quarter performance, in the
fourth quarter we expect higher
growth in Advanced Wound Management mainly due to improvement in
Advanced Wound Bioactives, a continuation of our positive momentum
in Orthopaedics, and slower growth in Sports Medicine reflecting
the headwinds in China.
We now expect trading profit margin to be around 17.5% for the full
year. As previously guided, trading profit margin in the second
half is expected to be considerably stronger than the first half.
Within that we expect to benefit from the usual seasonal margin
uplift, with the fourth quarter our strongest revenue quarter, as
well as the unwinding of one-time commercial costs from the first
half and our planned cost reductions. We also expect an increased
profit headwind from China from the market slowdown and as the
channel prepares for sports medicine VBP.
Consolidated revenue analysis for nine months to 30 September
2023
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30 September
|
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1 October
|
|
Reported
|
|
Underlying
|
|
Acquisitions
|
|
Currency
|
|
|
|
2023
|
|
2022
|
|
growth
|
|
Growth(i)
|
|
/disposals
|
|
impact
|
|
|
Consolidated revenue by business unit by product
|
|
$m
|
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$m
|
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%
|
|
%
|
|
%
|
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%
|
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|
Orthopaedics
|
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1,638
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|
1,564
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|
4.8
|
|
5.9
|
|
-
|
|
-1.1
|
|
|
Knee
Implants
|
|
698
|
|
665
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|
5.0
|
|
6.1
|
|
-
|
|
-1.1
|
|
|
Hip
Implants
|
|
444
|
|
434
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|
2.4
|
|
3.9
|
|
-
|
|
-1.5
|
|
|
Other Reconstruction(ii)
|
|
80
|
|
61
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|
31.3
|
|
32.0
|
|
-
|
|
-0.7
|
|
|
Trauma
& Extremities
|
|
416
|
|
404
|
|
2.9
|
|
3.9
|
|
-
|
|
-1.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sports Medicine & ENT
|
|
1,268
|
|
1,159
|
|
9.3
|
|
11.1
|
|
-
|
|
-1.8
|
|
|
Sports
Medicine Joint Repair
|
|
689
|
|
634
|
|
8.6
|
|
10.3
|
|
-
|
|
-1.7
|
|
|
Arthroscopic
Enabling Technologies
|
|
428
|
|
412
|
|
3.7
|
|
5.1
|
|
-
|
|
-1.4
|
|
|
ENT
(Ear, Nose and Throat)
|
|
151
|
|
113
|
|
34.4
|
|
36.9
|
|
-
|
|
-2.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advanced Wound Management
|
|
1,185
|
|
1,127
|
|
5.2
|
|
5.9
|
|
-
|
|
-0.7
|
|
|
Advanced
Wound Care
|
|
539
|
|
533
|
|
1.3
|
|
2.3
|
|
-
|
|
-1.0
|
|
|
Advanced
Wound Bioactives
|
|
404
|
|
388
|
|
4.1
|
|
4.0
|
|
-
|
|
0.1
|
|
|
Advanced
Wound Devices
|
|
242
|
|
206
|
|
17.3
|
|
18.6
|
|
-
|
|
-1.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
4,091
|
|
3,850
|
|
6.3
|
|
7.5
|
|
-
|
|
-1.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated revenue by geography
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US
|
|
2,191
|
|
2,022
|
|
8.4
|
|
8.4
|
|
-
|
|
-
|
|
|
Other Established Markets(iii)
|
|
1,191
|
|
1,119
|
|
6.5
|
|
7.8
|
|
-
|
|
-1.3
|
|
|
Total Established Markets
|
|
3,382
|
|
3,141
|
|
7.7
|
|
8.2
|
|
-
|
|
-0.5
|
|
|
Emerging
Markets
|
|
709
|
|
709
|
|
-
|
|
4.3
|
|
-
|
|
-4.3
|
|
|
Total
|
|
4,091
|
|
3,850
|
|
6.3
|
|
7.5
|
|
-
|
|
-1.2
|
|
(i)
Underlying growth is defined in Note 2 on page 2
(ii)
Other Reconstruction includes robotics capital sales, our joint
reconstruction business and cement
(iii)
Other Established Markets are Europe, Canada, Japan, Australia and
New Zealand
About Smith+Nephew
Smith+Nephew is a portfolio medical technology company 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 19,000 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
business units of Orthopaedics, Sports Medicine & ENT and
Advanced Wound Management.
Founded in Hull, UK, in 1856, we now operate in more than 100
countries, and generated annual sales of $5.2 billion in 2022.
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 X, 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 profit 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: risks
related to the impact of Covid, such as the depth and longevity of
its impact, government actions and other restrictive measures taken
in response, material delays and cancellations of elective
procedures, reduced procedure capacity at medical facilities,
restricted access for sales representatives to medical facilities,
or our ability to execute business continuity plans as a result of
Covid; economic and financial conditions in the markets we serve,
especially those affecting healthcare providers, payers and
customers (including, without limitation, as a result of Covid);
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 and financial compliance
risks and related investigative, remedial or enforcement actions;
disruption to our supply chain or operations or those of our
suppliers (including, without limitation, as a result of Covid);
competition for qualified personnel; strategic actions, including
acquisitions and disposals, 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;
relationships with healthcare professionals; reliance on
information technology and cybersecurity; disruptions due to
natural disasters, weather and climate change related events;
changes in customer and other stakeholder sustainability
expectations; changes in taxation regulations; effects of foreign
exchange volatility; 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, which is available on the SEC's website at www. sec.gov, 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 in US Patent and
Trademark Office.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
Smith
& Nephew Plc
(Registrant)
Date:
November 2, 2023
By: /s/
Helen Barraclough
-----------------
Helen
Barraclough
Company
Secretary
Smith and Nephew (NYSE:SNN)
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