30th Oct 2019 08:34
(Alliance News) - ConvaTec Group PLC said Wednesday trading in the third quarter was in line with management expectations, and it has kept its 2019 guidance unchanged.
Shares in medical device supplier were 6.9% higher in London in early trading at 196.50 pence each. The company started 2019 trading at 135.95p.
ConvaTec said its total revenue in the three months ended September 30 was USD462.9 million, 2.4% higher than the USD452.2 million reported a year before. The company said the improvement was driven by 4.6% growth in organic revenue.
Group performance was boosted by growth in all of the company's units - Advanced Wound Care, Ostomy Care, Continence & Critical Care, and Infusion Devices.
In Advanced Wound Care - ConvaTec's largest unit - revenue performance was driven by its silver portfolio, in particular AQUACELTM Ag+, and foam.
"A number of markets in EMEA and Latin America performed well, while we continued to focus on leveraging our specialised and expanded salesforce in the US. There were some distributor inventory movements in the current and prior year which provided a tailwind in the quarter, which we anticipate will partly reverse in the fourth quarter," ConvaTec explained.
The next largest unit, Ostomy Care, had a "solid" performance in the quarter, benefiting from the timing of a tender in Latin America.
The largest unit growth came from Continence & Critical Care, which saw 8.0% organic growth. ConvaTec said this was driven by a "good" performance in Continence Care, primarily Home Distribution Group. Critical and Hospital Care benefited from a "weaker" prior year comparator, a result of a packaging recall which was instigated in the third quarter of last year, ConvaTec added.
"I am pleased we have reported a solid performance in the third quarter, but this is a small step on the significant journey ahead of us as we focus on pivoting to sustainable and profitable growth. As an organisation we need to get closer to patients, to strengthen our innovation pipeline and to drive a relentless focus on execution excellence," said Chief Executive Karim Bitar.
In the nine month period, revenue was USD1.35 billion, which represents a reported drop of 1.6% - blamed on foreign exchange movements - but growth of 1.5% on an organic basis, CovaTec said.
The FTSE 250-listed company is undergoing a structural transformation, which was initiated in February. First-half costs for this programme were USD14 million, out of an anticipated full-year spend of USD40 million.
"The Transformation Initiative remains on track as we continue to implement the improvement projects and we will provide an update on progress with the 2019 results," the company added.
The company also said its outlook for 2019 is unchanged. ConvaTec is guiding for organic revenue growth of between 1.0% to 2.5% and an adjusted Ebit margin, including costs from its transformation programme, between 18% and 20%.
In 2018, ConvaTec reported pretax profit of USD201.2 million on revenue of USD1.83 billion.
By Paul McGowan; [email protected]
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