Full Year 2021 Smith & Nephew PLC Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Thomas M. Jones - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst : I had two questions really. The first was just on your 2022 revenue guidance in the context of the businesses it's performed between 2019 and 2021. I guess if I look at your underlying growth on the chart you've got on Page 5, you did minus 12% in ortho, sort of minus 2, 3 in the other divisions. Without COVID, you would have expected probably also to grow maybe 8% over that time frame. Sports Med probably something in the double-digit range cumulatively. And Wound, maybe mid-single digits. So depending on the franchise, there's somewhere between kind of 10% and 20% of the revenue that you would otherwise have expected that has gone somewhere. How much of that do you think is just straight REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 22, 2022 / 8:30AM, SN.L - Full Year 2021 Smith & Nephew PLC Earnings Call pent-up demand? How much of that do you think is gone forever because of COVID? And how much of it do you think you've lost to competitors? I'm just trying to get a sense of kind of how much pent-up demand release you've baked into your 4%, 5% overall underlying growth guidance for 2022. And then the second question is just on your guidance for 125 basis points of margin pressure from input cost inflation. I'm actually somewhat surprised by that number, more in the way that it seems quite low, to be honest. I mean if you look at your cost base of kind of circa $4 billion on a fully loaded basis, you're talking sort of 60%, 70%, $60 billion, $70 billion headwind at that level, which is sub 2%, which, given the wider inflationary environment, it looks like quite a low number. And even if I just look at physical input costs, probably 1/2, 1/3 of your total cost, you're still talking a low single-digit number. So I guess how confident are you in that 125 basis point headwind being as bad as it's going to get? Because it does seem like quite a modest impact in the grand scheme of the wider inflationary environment at the moment.

Question: Thomas M. Jones - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst : No, no, that's fine. I'll follow up in a second.

Question: Thomas M. Jones - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst : Okay. Perfect. That's clear. And then just a follow-up is kind of you mentioned (inaudible). On the supply chain issues that are affecting revenues, I think you mentioned in the presentation, you expect a gradual improvement in -- across H1. But could you just give us a little bit more color on specifically beyond if there's any franchises beyond hips that are affected and kind of the trajectory of that recovery. Is it kind of something that will resolve quickly? Or is it would just be a gradual improvement as the half progresses.

Question: Thomas M. Jones - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst : Good. That's all very clear. And all the best for the future, Roland.