Shares in medical products company ConvaTec (CTEC) gained 3% to 195p on Friday after reporting a resilient full year performance and providing a better than expected outlook.
The company, which has seen demand pressure as elective procedures were delayed because of Covid, said it expected to deliver organic revenue growth of between 3% to 4.5% and a constant currency adjusted EBIT margin (earnings before interest and tax) of between 18% and 19.5%.
Numis noted revenue guidance was above consensus that had been pitched at 2.7% organic growth, while the margin guidance was higher than its own expectation of 17.7%, leaving ‘upside risk’ to forecasts.
ConvaTEc also confirmed it was on track to deliver $130 million-to-$150 million of gross benefits from its transformation programme in 2021.
Chief executive Karim Bitar remained optimistic, saying that while there was still work ahead, ‘we continue to strengthen our foundations and begin to pivot to sustainable and profitable growth’, he said.
‘I am confident in the inherent attractiveness of the markets we serve and in ConvaTec’s growth prospects’, the chairman concluded.
RESILIENT PERFORMANCE
Full year revenues to 31 December 2020 grew 4% to $1.89 billion in constant currencies driven by a strong performance in Continence and Critical care (+9.3%) and Infusion Care (+16.7%), offset by a significant reduction in elective procedures as hospitals were restricted to dealing with Covid-19 patients.
Wound Care revenues dropped a 4% as access to clinics and hospitals was reduced during the pandemic. The division was impacted by the disposal of the US skincare product.
Infusion Devices benefited from growth in the company’s leading position in serving the fast-growing ‘smart glycemic control’ segment of the diabetes market.
CONSISTENT CASH GENERATION
Despite the challenges of the pandemic the company generated $399.5 million of operating cash in line with last year. After spending more on capital expenditures and taxes, adjusted free cash flow was $347.4 million. ($396.8 million)
The company ended the period with cash and equivalents of $565.4 million and net debt of $891 million, equivalent to two times adjusted EBITDA (earnings before interest, taxes, depreciation, and amortisation), compared with 2.5 times last year.
The company proposed a dividend of 5.7 cents per share, in line with 2019.
