The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: Thomas M. Jones - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst
: I had 2 questions. One maybe for Graham and one for Roland. The first one, maybe for Graham. I was just -- your guidance implies
kind of an underlying improvement of about 70 to 80 basis points in 2020 on the margin. I was just wondering if you could split that
into what's coming from cost savings already achieved in 2019, cost savings you expect to achieve in 2020 and what is coming from
inherent operating leverage or other in-built drivers. I guess what I'm trying to get to is kind of what's the sort of natural expansion
and how much of it is kind of a onetime step-up relating to cost savings.
And then the second question, a bit of a boring one, I know, but one I think we need to ask for Roland on the M&A front. Yes, just
wondering how you're feeling about the balance between large and smaller acquisitions. A year ago, your predecessor teed us up
for a significant-sized acquisition and a significant increase in leverage and then precisely nothing happened. And he continued
along the path of doing small, very successful onesie-twosie type deals. I'm just wondering kind of conceptually how you're thinking
about the relative attractiveness of a larger number of smaller deals versus a larger strategic deal.
Question: Virendra Singh Chauhan - AlphaValue - Analyst
: Hello?
Question: Virendra Singh Chauhan - AlphaValue - Analyst
: Yes. So I have a couple of questions. Firstly, on the hip slowdown that you also mentioned. It was due to a -- I think, a vendor or
supplier side issue. So I just wanted to understand if we should be thinking of that as a 1-quarter blip or should we be thinking of it
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FEBRUARY 20, 2020 / 9:00AM, SN.L - Full Year 2019 Smith & Nephew PLC Earnings Call
as a persistent one for the next few quarters and then you kind of lap that up? So should we be thinking that -- what exactly would
be the nature of this?
Question: Virendra Singh Chauhan - AlphaValue - Analyst
: Okay. And just another follow-up -- not a follow-up, I have another question. So if you look at the performance for the last few
quarters, singling out or picking out Wound as an area or -- from 3 franchises, if I might put it that way, Wound seems to be one area
of the clear underperformance, and if you also look at the non-device business, especially. So Roland, any specific comments on --
since you have comments on what could be the potential pain points and how you try and fix them because I think that looks like
a low-hanging fruit probably which you'd want to -- we'd want to fix at the earliest.
Question: Virendra Singh Chauhan - AlphaValue - Analyst
: Yes, I think -- yes, yes. That was pretty much.
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