A pause on elective surgeries during lockdown dealt a blow to Convatec’s (CTEC) advanced wound care business. Indeed, first-half revenues here fell by 7.6 per cent to $251m (£191m) – or by 4.8 per cent at constant currencies.
However, continence and critical care achieved an organic sales improvement of 11.5 per cent to $244m, benefiting from Covid-19-related usage. Meanwhile, infusion care sales increased by 12.6 per cent to $161m, buoyed by growth in insulin pump orders. Analysts at RBC Capital Markets had projected lesser growth rates of 9 per cent and 4 per cent, respectively.
Group adjusted operating profits rose by a fifth to $182m – higher than consensus estimates of $161m. Such an increase was helped by a prior-year rebate provision and temporary cost reductions due to the pandemic.
Convatec is pushing ahead with its transformation goals, aiming to focus on key markets, lift investment in research and development and simplify its operating model. However, it has modified its planned investments in response to the virus. Recurring transformation expenditure this year is expected to range between $50m and $55m – down from a previous forecast of $60m-$65m.
Convatec has also unveiled plans to divest its non-core skin-care business – anticipating proceeds of $29m on completion.
| CONVATEC (CTEC) | ||||
| ORD PRICE: | 202p | MARKET VALUE: | £4bn | |
| TOUCH: | 201.4-202.2p | 12-MONTH HIGH: | 226p | LOW: 142p |
| DIVIDEND YIELD: | 2.1% | PE RATIO: | 266 | |
| NET ASSET VALUE: | 76ȼ* | NET DEBT**: | 68% | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (ȼ) | Dividend per share (ȼ) |
| 2019 | 889 | 61.3 | 2.0 | 1.72 |
| 2020 | 908 | 81.5 | 3.0 | 1.72 |
| % change | +2 | +33 | +50 | - |
| Ex-div: | 03 Sep | |||
| Payment: | 15 Oct | |||
*Includes intangible assets of $2.1bn or 103ȼ a share £1=$1.32 | ||||
