Smith & Nephew plc (SNN) Q2 2022 Earnings Call Transcript

For the period ending June 30, 2022

July 28, 2022 3:30 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Deepak Nath

I'll just draw your attention to the safe harbor statement on the slide that's about to pop up in front of us. So, it's a pleasure to be reporting the results of my first full quarter as CEO and also to be meeting many of you in person for the first time.

So as you can imagine, I've been spending these last few months getting into the detail of the business and building up a picture of how we can drive greater performance and value. So, before we get into the quarters numbers, I'd like to share my initial thoughts on Smith & Nephew's positioning, some of our early priorities and our expectations.

Smith & Nephew has many exciting opportunities with a number of factors that are lining up for us to take go to the next level of growth. Innovation is a key driver of value in our industry and this is a company with innovation at its core. I've seen leading technology in every aspect of the business in established products, in recent launches, and in the depth of pipeline across our franchises.

Secondly, the fundamental competitive positioning is strong. We have a clear right to win in all franchises. There are structural advantages that are distinct from our competitors and our proprietary platform technology with applications across multiple devices and procedures. And importantly, the delivery is good in two out of our three franchises that account for about 60% of our revenue base. So there's no systemic barrier to execution.

The challenges won't be surprising to you. Strategic execution in orthopedics still needs to improve. And our manufacturing and supply chain are not yet where we need them to be. Both our growth and our margin recovery have been held back as a result.

So I've spent some time going after the root causes. Although, there's already some work underway, we have now developed a new structured program of execution with a deep level of oversight that I know is required to deliver this type of program and at pace. This work is already stored in.

Turning to our results, I would say our first half performance was mixed. Wound and sports medicine continued to be on track whereas orthopedics was held back by execution and supply chain challenges, and of course the impact of China VBP.