Medical products manufacturer ConvaTec (CTC) saw its full-year cash profits slide 8 per cent to $421m (£328m), which management attributed, in part, to its ongoing transformation programme – although it plans to boost spend in this area to around $210m by 2021. Profitability was also held in check by operating cost increases of $69.1m, so the best that can be said is that it’s a work in progress.
Its operations had a mixed year, with half of its divisions posting some increase in sales – including a welcome recovery in its infusion device business, which was up by 3 per cent. Overall revenue however was broadly flat as its advanced wound care division, which accounts for just under a third of of total group sales, fell by about 3 per cent. Adjusted cash conversion was up to 98 per cent compared with 81 per cent in 2018.
The group also introduced a new corporate strategy that envisions a simplified operating model, and it seems so far its transformation is progressing well – although its product portfolio review resulted in a $106m impairment of intangible assets.
Broker Peel Hunt forecasts adjusted pre-tax profits of $269m and EPS of 11.3ȼ in 2020, increasing to $310m and 12.9ȼ in its 2021 financial year.
| CONVATEC (CTEC) | ||||
| ORD PRICE: | 200p | MARKET VALUE: | £3.97bn | |
| TOUCH: | 199.6-200p | 12-MONTH HIGH: | 226p | LOW: 130p |
| DIVIDEND YIELD: | 2.2% | PE RATIO: | na | |
| NET ASSET VALUE: | 79p* | NET DEBT: | 76%** | |
| Year to 31 Dec | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (ȼ) | Dividend per share (ȼ) |
| 2015*** | 1.65 | -110 | -7.0 | nil |
| 2016 | 1.69 | -126 | -15.0 | nil |
| 2017 | 1.76 | 164 | 8.0 | 5.7 |
| 2018 | 1.83 | 201 | 11.0 | 5.7 |
| 2019 | 1.83 | 18.9 | neg | 5.7 |
| % change | -0.3 | -91 | - | |
| Ex-div: | 2 Apr | |||
| Payment: | 14 May | |||
| *Includes intangible assets of $2.17bn or 109ȼ a share **Includes lease liabilities of $88.5m ***Pre-IPO figure £1=$1.29 | ||||
