New CEO appointment welcomed by shareholders

Deeside-based medical products and technologies group ConvaTec announced a series of boardroom appointments today, including a new chief executive.

Karim Bitar, who has been chief executive of global agricultural biotech group Genus since 2011, will take the lead role from September 30, after former CEO Paul Moraviec stepped down with immediate effect on October 15, last year.

During Mr Bitar’s tenure as CEO of Genus, shareholder returns increased by more than 150%.

Prior to Genus, he spent 15 years in various roles with increasing responsibility at Eli Lilly where, from 2008 he was President of Europe, Australia and Canada, leading an organisation with annual sales of approximately $5bn per year.

ConvaTec chairman, Sir Christopher Gent, said: “I am delighted to announce Karim’s appointment as chief executive officer of ConvaTec.

“He is an experienced and highly regarded leader with an excellent track record of delivering impressive results and transformational change within similar businesses. The board and I are very confident that Karim is the right person to lead ConvaTec through the next stage of the company’s development.”

Mr Bitar said: “ConvaTec competes in attractive chronic care markets and has a solid portfolio of products and services.

“I am excited by the opportunity to lead ConvaTec to stronger and sustainable rates of profitable growth.

“ConvaTec has the potential to achieve market leadership across its franchises, by focusing on innovation and execution excellence and by leveraging its global presence.”

Sir Christopher also announced today that, following Mr Bitar’s appointment, he wishes to retire and, therefore, will not seek re-election as a director at the group’s forthcoming Annual General Meeting on May 9.

A special nominations committee has been established to identify Sir Christopher’s successor as chair of the board.

Rick Anderson, currently interim chief executive, has agreed to temporarily serve as executive chairman until a new chair has been appointed, effective from May 9.

The board has appointed Rick to the executive chairman role on a temporary basis to maintain continuity within the senior leadership of the company during the transitional period until the new chief executive joins on September 30, and to drive the recently announced transformation initiative.

Rick will then move to be non-executive chairman until a permanent appointment is made.

The board also announces that Steve Holliday, deputy chairman and senior independent director, has resigned as a member of the board with effect from March 31.

In his place, Margaret Ewing will be appointed as senior independent director from that date and Ros Rivaz will be appointed as chair of the remuneration committee and member of the audit & risk committee.

Both Margaret and Ros are currently independent non-executive directors of ConvaTec and have strong relevant executive and non-executive experience across the sector and with large listed businesses.

Sir Christopher Gent said: “Following the announcement of Karim Bitar’s appointment, both Steve and I have concluded that this is the right time to step down from the board. I would like to thank Steve for his valuable contribution to the board since he became a director in 2016, in particular successfully leading the process to appoint our new CEO.

“I would also like to thank Rick for agreeing to stand in as executive chairman until our new CEO commences his duties at the end of September, or until such time as the board is in a position to announce the appointment of a new chair.

“Under Rick’s leadership, ConvaTec is now making good progress on our Pivot to Growth initiative, designed to address the past performance issues within and across the group and to establish the platform to return the group to the growth rate rightly expected by our shareholders.

Sir Christopher Gent

“Margaret and Ros have made a significant contribution to ConvaTec since joining the board in 2017. Their additional responsibilities will serve shareholders well as ConvaTec continues to execute on its operational transformation agenda.”

The day Paul Moraviec announced his retirement coincided with a fall of more than 26% in ConvaTec shares after the group revised down its growth and earnings expectations.

ConvaTec said this was largely due to a change in inventory policy by its biggest customer in the infusion devices franchise, which was expected to have a material negative impact on revenue in the fourth quarter of between $18-$23m (£13.72-£15.53m), and, “to a lesser extent, challenging market dynamics in specific markets in advanced wound care”.

Commenting on today’s appointment, Russ Mould, investment director at Manchester investment platform AJ Bell, said: “ConvaTec’s gain is Genus’s pain as the former poaches the head of the latter to be its new chief executive.

“The medical equipment maker has signed up Karim Bitar to lead turnaround efforts following a nasty profit warning last October which cost the previous CEO Paul Moraviec his job.

“Interestingly, ConvaTec is now also losing its chairman and deputy chairman, paving the way for a new way of thinking within the business.

“This fresh start has certainly gone down well with investors as Convatec is one of the few large cap stocks to be rising on a bad day for the UK stock market.

“ConvaTec desperately needs a new lease of life as it has been a serial disappointment for most of its time as a listed business.

“Having made an impressive start by qualifying for the FTSE 100 index mere weeks after its IPO in 2016, its shares have been in a falling trend since Summer 2017.

“Supply disruptions were followed by the departure of its chief financial officer in August 2017. Its US arm then failed to perform as expected and the UK market was very tough for its wound care operations.

“Last month ConvaTec outlined plans to invest approximately $150m over three years, with an additional $50m of ongoing investment costs after the third year relating to commercial spending and research and development.

“The scale of such investment was significantly greater than expected, despite having scope to deliver $120m in annual savings by 2023, as well as improvements in revenue growth and profit margins.”

By mid-morning ConvaTec’s shares had risen by 4.66% to 140.50p.