Smith & Nephew(US:SNN)2023-02-22 02:50Financial Data and Key Metrics Changes - Revenue for the full year was $5.2 billion, reflecting a 4.7% growth on an underlying basis compared to 2021, while reported revenue growth was flat at 0.1% due to foreign exchange headwinds [12][81] - Trading profit was $901 million, resulting in a trading margin of 17.3% [81] - Adjusted earnings per share grew by 1.1% to $0.818 [81] Business Line Data and Key Metrics Changes - Orthopaedics grew by 4.1% underlying, with significant contributions from new product launches [4][5] - Sports Medicine and ENT franchise grew by 9.2%, with Joint Repair growing 11.5% [11] - Advanced Wound Management showed strong growth, with Advanced Wound Devices growing 14.9% [45] Market Data and Key Metrics Changes - The U.S. market grew by 4.8%, established markets grew by 7.3%, and emerging markets grew by 12.1%, largely driven by a return to growth in China [2][3] - The company expects continued above-market growth in Sports Medicine and Advanced Wound Management, with further improvement in Orthopaedics [20] Company Strategy and Development Direction - The company is implementing a 12-point plan aimed at transforming operations and driving higher growth, targeting consistent underlying growth of 5% or higher [24][30] - Focus on innovation and product launches, with 25 expected in 2023, to enhance market position and drive growth [67] - The strategy includes optimizing pricing and cost savings to achieve a trading margin in excess of 20% by 2025 [53][68] Management's Comments on Operating Environment and Future Outlook - Management acknowledges challenges from inflation and supply chain disruptions but remains optimistic about growth and margin expansion in 2023 [8][52] - The company expects to see benefits from cost actions and operational improvements throughout 2023, with a stronger second half anticipated [95] - Management emphasizes the importance of innovation, with over 60% of revenue growth in 2022 coming from products launched in the last five years [85] Other Important Information - The company faced headwinds from semiconductor and resin shortages, but improvements in supply chain performance are expected [1][16] - The company plans to reduce inventory levels as part of its 12-point plan, with a focus on managing raw material availability [14][49] Q&A Session Summary Question: Can you provide more information on the timing of margin components? - Management expects to see benefits from G&A and sales and marketing cost actions starting in 2023, with manufacturing network optimization having a more back-end loaded impact [94][95] Question: What is the rationale for the 5% plus organic growth ambition? - Management cites strong performance in 2022 and a robust pipeline of products as key drivers for confidence in achieving this growth target [97][99] Question: How do you see the sustainability of the turnaround in Orthopaedics? - Management indicates that a mix of pricing improvements and addressing historical product gaps will be crucial for sustainable growth in Orthopaedics [108][109]