Full Year 2024 Smith & Nephew PLC Earnings Call Transcript
Key Points
- Smith & Nephew PLC (SNN) reported a 60 basis points margin expansion for 2024, driven by operational leverage and productivity improvements.
- The company achieved 95% cash conversion, surpassing its target, and reported higher return on invested capital (ROIC) of 1.4%.
- Smith & Nephew PLC (SNN) delivered 8.3% underlying growth in Q4 2024, with strong performance in the US market, which grew by 11.9%.
- More than 60% of revenue growth in 2024 came from products launched in the last five years, highlighting the company's focus on innovation.
- The company has made significant progress in reducing inventory days and improving the quality of its inventory, contributing to better cash flow management.
- China posed a significant headwind, costing 280 basis points of group growth in Q4 2024, and is expected to continue impacting growth in 2025.
- The company faced a 40 basis points drag on gross margin due to the price impact of joint repair VBP in China.
- Smith & Nephew PLC (SNN) anticipates a 25% sales headwind from the expected China VBP process on mechanical resection blades and COBLATION wands in 2025.
- The company's Orthopedics business in China is currently not profitable at VBP price levels, raising concerns about its long-term viability in the region.
- Smith & Nephew PLC (SNN) has experienced market share loss in China, particularly in the orthopedics segment, due to increased competition from local manufacturers.
Good morning and welcome to the Smith & Nephew Q4 and full year 2024 Results Presentation. I'm Deepak Nath, I'm the Chief Executive Officer; and joining me is our Chief Financial Officer,
Looking at our full year numbers, I'm pleased to be able to report that the 12-point plant is delivering financial outcomes. Our operational and commercial actions have combined with the high cadence of innovation to produce consistently higher growth than in the past.
Margin expansion is beginning to follow driven by both operating leverage and productivity improvements, which are becoming more visible as macro headwinds ease. Better working capital discipline and asset utilization also means that our
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