Interim Results for the 6 months ended 30 June 2020

06 August 2020

Solid H1 performance, strategy implementation on track, COVID-19 challenges continue

Key points:

• Group reported revenue of $908 million up 2.1% year on year, 4.3% in constant currency¹ driven by Continence and Critical Care and Infusion Care, partially offset by lower Advanced Wound Care revenue.
  • As expected, second quarter growth was impacted by lower volumes in Advanced Wound Care and by the unwinding of increased customers’ inventories in Ostomy Care.
• The strategic transformation is progressing well; with investments proactively re-phased in response to conditions resulting from COVID-19.
  • Recurring transformation investment in 2020 expected to be between $50 million and $55 million (previously $60 million and $65 million), of which $16 million in the first half.
  • As a result, annual gross benefits in 2021 now expected to be between $130 million and $150 million (previously between $150 million and $170 million).
• Reported EBIT⁴ of $113 million, 20.7% higher year on year, and Adjusted EBIT² of $182 million, 10.0% higher, reflecting the prior year rebate provision, temporary cost reductions due to COVID-19 and net productivity gains. Adjusted² EBIT margin increased to 20.0% (2019: 18.6%).
• Interim dividend of 1.717 cents declared, in line with the prior year.
• Reduction in leverage to 2.2x net debt/adjusted EBITDA^{2, 3} (31 December 2019: 2.5x), adjusted cash conversion² of 73% (30 June 2019: 90%) with the prior year benefiting from favourable inventory movements.
• FY2020 outlook maintained: uncertainty and risk of disruption due to COVID-19 remains.
  • Lower revenue growth and higher transformation investment expected in the second half, alongside a return to higher operating expense levels.

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Karim Bitar, Chief Executive Officer, commented:

“In the first half, despite the disruption caused by COVID-19, we delivered a solid trading performance and continued to implement our strategy to Pivot to Sustainable and Profitable Growth.

Whilst there remains much work to do, we continue to push forward with key initiatives. In light of the current circumstances, we have accelerated some investments, in particular in our digital capabilities to respond to changes in customer engagement preferences, and our new operating model is embedding well. Conversely, other investments, such as salesforce expansions, have been deferred.

Looking ahead, we remain committed to supporting and protecting our colleagues and the people and care givers we serve, whilst continuing to maintain the resilience of our supply chain. We are conscious of COVID-19 related challenges in the second half, have taken proactive steps to address them where possible and are maintaining our full year outlook.”

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