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 have 2 really. The first was just to dig a little deeper on the margin outlook. I think all the FX and M&A effects are very clear. But you mentioned
in your prepared remarks that you expect further ongoing headwinds from COVID on the gross margin, but to be able to offset some of that through
further temporary cost savings. I'm not sort of asking for a specific number, but it would be helpful if you could give one. But ballpark, where do
you see the net of those 2 things on margins in 2021? Are we talking minus 50, minus 100, minus 200? Some kind of color would be helpful.
And then the second question is just on cash and capital deployment really. You're sitting on quite a massive part of cash, which obviously isn't
generating much of a return at the moment and is costing you something. I can understand why you would sell that much liquidity in the teeth
of the COVID outbreak. But we're coming towards the end of that, the pressure to deploy it must be building somewhat. So maybe you could just
give us some color on kind of when you think you might be able to put that money to work? And also how much of it you think you might put
through CapEx and how much will go on M&A? And then a sort of sub-question to that is I was surprised to see CapEx actually increase in 2020
versus 2019. Most Medtech companies are kind of reined back on their CapEx expenditure in the pandemic. So maybe you could just explain where
all that money went in 2020? I expect a positive benefit from it.
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FEBRUARY 18, 2021 / 8:30AM, SN.L - Full Year 2020 Smith & Nephew PLC Earnings Call
Question: Thomas M. Jones - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst
: Okay. So...
Question: Thomas M. Jones - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst
: Sorry. I was going to remind you of the third question...
Question: Thomas M. Jones - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst
: Perfect. And maybe just a follow-up question on the cost-saving program. Obviously, you're new to the business, but Smith & Nephew sort of had
ongoing restructuring programs for pretty much as long as any of us have been covering this, which for me is pushing up towards 15 years now.
When you came into this business, how easy was it to find further savings? I think ballpark, this must be the sixth or seventh restructuring program
Smith & Nephew has undertaken in the last 20 years. Were they fairly obvious to you? Or did you really have to dig deep into the business to try
and find further cost savings? I guess the question I'm asking is really what's the disruption risk related to this next cost-saving program?
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