Smith & Nephew plc (SNN) Q3 2022 Earnings Call Transcript

For the period ending September 30, 2022

November 3, 2022 4:30 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Deepak Nath

Good morning. Welcome to the Smith & Nephew Third Quarter Call. I'm Deepak Nath, and with me is our Chief Financial Officer, Anne-Francoise Nesmes.

It's been a solid third quarter. The stronger growth we expected for the second half is coming through, and we remain on track with the guidance we gave at the half year. Before Anne-Francoise takes you through the detail, I'll make a few comments on our strategic progress.

When we spoke in July, I set out my view of where Smith & Nephew is. We're a company with strong innovation throughout the portfolio, where two of the three franchises are already delivering effectively. And we introduced to you our 12-point plan to improve our execution further, including the rewiring of orthopedics and operations.

Today, we're one quarter into that plan. It's a journey, and we're still at the start, but I'm pleased with the early progress we're making. Firstly, we've embedded the structures to drive this work, the KPIs to monitor progress and drive accountability have been established. The teams are operating to a new tighter cadence, with me personally leading the call every two weeks.

We're also recording some early successes in rewiring Orthopaedics. Our new demand planning process has now been active for a full quarter, and our level of back orders is starting to come down. We're also driving an initiative on capital utilization by redeploying underused instruments. It's early for these to be showing in our numbers, but we're showing the behavioral change and the sense of urgency that we need.

And our work is not just about fixing things, we're building up our long-term growth potential at the same time by continuing to deliver important innovation. We've added new launches across the franchises and have made more key projects in robotics, extremities and negative pressure expected to come in the next few quarters.

Now I'll hand it over to Anne-Francoise.

Anne-Francoise Nesmes

Thank you, Deepak, and good morning, everyone. The third quarter revenue was $1.25 billion, which represents a 4.8% underlying growth. As you see on the slide, all three franchises contributed to our growth.

The acceleration over the first half of 2022 came from our surgical businesses in Orthopaedics and Sports Medicine & ENT. Advanced Wound Management sustained its strong performance from recent quarters. Of course, macro conditions have not yet normalized. Availability of certain critical components, such as electronics and resin, impacted elements of all three franchises.