Smith & Nephew(US:SNN)2019-05-02 13:33Financial Data and Key Metrics Changes - Smith & Nephew reported a 4.4% underlying growth rate in Q1 2019, with all three franchises accelerating from 2018 performance [5] - The U.S. market, which constitutes about half of the business, grew by 4%, while emerging markets saw over 15% growth, particularly driven by China, which exceeded 20% growth in the quarter [5] - The company expects reported sales growth for 2019 to be between 2.9% and 3.9%, with trading profit margin guidance between 22.8% and 23.2% [32][33] Business Line Data and Key Metrics Changes - Orthopaedics grew by 3.9%, with knees growing by 4.1% and hips by 2.4%. Trauma grew by 4.8%, driven by an 8% growth in plates and screws [6][7] - Sports Medicine & ENT was the highest growth franchise at 5.3%, with joint repair business growing by 11% [9] - Advanced Wound Management grew by 4.1%, with Advanced Wound Devices showing significant growth of 16.4% [11] Market Data and Key Metrics Changes - Emerging markets, particularly China and India, are expected to drive sales growth in the Asia Pacific region for the remainder of the year [5] - Other Established Markets showed slight negative growth, although Europe returned to positive growth after a decline in the previous year [5] Company Strategy and Development Direction - The company is focusing on M&A strategy, having closed several acquisitions including Ceterix, Osiris, and Leaf, which are expected to enhance growth in high-potential segments [12][13][14] - Smith & Nephew is advancing in digital surgery and robotics, with plans to launch next-generation robotic platforms and software in the second half of 2019 [15][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving full-year sales growth in the upper half of the guidance range due to a strong start in Q1 [32] - The company is optimistic about its positioning in the market, citing favorable demographics and demand for better clinical outcomes [28] Other Important Information - The company announced the appointment of Myra Eskes as the new President for Asia Pacific, expected to enhance leadership in a strong-performing region [17] - Management emphasized the importance of a solutions approach in sales, particularly in the Sports Medicine segment [20] Q&A Session Summary Question: How have changes in sales and marketing impacted performance? - Management indicated that the focus on sales and marketing was to maximize existing assets and improve customer care, which was identified as a key area for improvement [37] Question: How does the company compare to competitors post-changes? - Management believes the portfolio is competitive and well-positioned within the market [38] Question: What is the outlook for the Sports Medicine business in China? - Management expects to grow at or above market rates, supported by unique assets and geographic positions [45] Question: What does financial discipline mean in the context of M&A? - Management clarified that financial discipline involves assessing multiple financial lenses and ensuring strong returns on investments from acquisitions [47] Question: What is the company's appetite for smaller versus larger acquisitions? - Management is open to both smaller and larger acquisitions, emphasizing a proactive approach to identifying opportunities [53] Question: What is the outlook for the hip and knee market? - Management noted that while there may be quarterly variances, the overall market remains solid with good growth prospects [61] Question: What is the competitive situation in Europe for Advanced Wound Care? - Management acknowledged ongoing price pressure in Europe but highlighted positive performance in the U.S. market [80]