Half 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 2 sort of areas I wanted to touch on. One was guidance and 1 was pricing. On the guidance front, your revenue growth guidance language is stated as including largely unconstrained surgery volumes. How would you quantify the current constraints on surgery volumes in the context of that largely statement? Are we sort of somewhat constrained, largely constrained, unconstrained? And then, I guess, if we look at sort of the outlook for H2, one would think -- most of us would assume that U.S. and Europe continues to see an improvement in the pandemic situation, but some of the more emerging markets where vaccination programs are less advanced, potentially seeing some problems. So if we look at those smaller markets where there's a higher likelihood of the pandemic getting worse before it gets better, to what extent would that affect the guidance range? I mean, is it an order that would just push you towards the lower end rather than the higher end? Or are those markets collectively big enough to a have more meaningful impact? And then the second question on guidance, probably one for Anne-Francoise was on the current supply chain issues. I mean, given that you're talking about it pretty openly now, these don't look like issues that have suddenly popped up from nowhere and that you've maintained your margin guidance. I mean, is it fair to assume that these supply constraint issues both on sort of availability perspective and the cost perspective are fully factored into your existing guidance?

Question: Thomas M. Jones - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst : Perfect. And then just kind of a follow-up question on the cost side of things. The cost issues that you're currently facing aren't unique or specific to Smith & Nephew. They're largely macro-driven issues. We're all just assuming that, that feeds through to margin pressure and there's no compensatory pricing increase. But why is that assumption necessarily correct? The industry largely has the same structure as it did in the Northeast, REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 29, 2021 / 7:30AM, SN.L - Half Year 2021 Smith & Nephew PLC Earnings Call a period where it enjoyed quite significant positive pricing. So given that everyone in the industry is facing similar issues and similar price pressures, why should we continue to assume that pricing is the usual sort of low single-digit percentage negative? At what point is there some potential for you to start pushing prices back up, ending the kind of circa 10-year decline in pricing that we've seen?