9th Mar 2023 13:08
(Alliance News) - Analyst were pleased with ConvaTec Group PLC's results on Thursday, after its revenue beat expectations by "a touch."
ConvaTec on Thursday reported a profit fall for 2022, amid a small rise in revenue, as it lifted its dividend.
The Reading, England-based medical products and technologies company was promoted to the FTSE 100 back in September. The company sells products and services in wound & skin care, ostomy care, continence and critical care and infusion devices.
Revenue was up 1.7% to USD2.07 billion in 2022, from USD2.04 billion in 2021. ConvaTec noted "strong" organic growth in Advanced Wound Care and Infusion Care, and "good" organic growth in Ostomy Care and Continence & Critical Care.
Liberum analyst Seb Jantet said that revenue growth was a "a touch ahead of expectations." Liberum had expected revenue growth of 0.6%. Jantet said that the outperformance was "largely" down to currency.
"From a divisional perspective numbers were pretty much in line," Jantent added.
Operating profit was up by 1.8% to USD207 million from USD204 million in 2021.
Peel Hunt analysts Miles Dixon & Edward Sham said this was a small beat to consensus expectations of USD391 million. This marks a 3.3% beat.
Pretax profit, however, was down by 46% to USD81.9 million from USD151.3 million, as gross finance expenses jumped to USD73.2 million from USD4.3 million a year earlier. According to MarketScreener-cited consensus, pretax profit was expected to drop just 11% to USD134 million.
Chief Executive Officer Karim Bitar said: "Convatec achieved good sales growth and, despite the challenging market backdrop, delivered positive adjusted operating margin expansion, ahead of guidance."
ConvaTec declared a final dividend of 4.330 cents, bringing the total dividend to 6.047 cents, up 3.0% from 5.871 cents a year prior.
Looking ahead, the company said it is pleased with growth achieved in 2022, and is focused on "pivoting to sustainable and profitable growth".
It expects organic revenue growth to be between 4.5% to 6% for 2023, a touch ahead of previous guidance of 4% to 6%. Peel Hunt analysts Dixon & Sham said this compares to current consensus expectations of 5.1%
Dixon & Sham noted that they expect inflation to "remain a significant headwind in 2023."
"There might be some small movements up in consensus financial 2023 revenue expectations and perhaps even margins (for example, 10 basis points) following these results, which we think should be seen as an incremental positive today," Dixon & Sham added.
Liberum's Jantet, however, said: " We do not expect consensus to change on the back of today’s results and the ahead of expectations results together with a confident outlook statement should reassure the market."
Jantet added: "We expect the shares to go stronger today."
Liberum reiterated its 'buy' recommendation for ConvaTec shares, with a target price of 282 pence. Peel Hunt rates it at 'add', with a target price of 250p.
Shares were down 1.7% to GBP220.60p each on Thursday afternoon in London.
By Sophie Rose, Alliance News reporter
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