Wound care group raises revenue and operating profit margin forecasts
Organic revenue growth, and operating profit margin, are expected to increase this year, said Deeside-based medical products business, Convatec, ahead of its AGM, today.
An update covering the four months ended April 30, 2023, revealed the group, which last month announced it had acquired anti-infective technology from an Oxfordshire business in a deal worth a potential £176m, had made a good start to the year.
Revenue increased by 3.1% on an organic basis. On a reported basis revenue decreased by 1.7%, as expected, following the exit of the hospital care activities and related industrial sales in 2022. On a constant currency basis revenue increased by 0.8%.
Given the good organic growth so far this year against tough comparatives, coupled with the improving momentum and confidence in the outlook, the group now expects organic revenue growth for 2023 to be between five per cent and 6.5%, compared with previous estimates of 4.5%-six per cent.
In Advanced Wound Care, organic growth was mid-single digit, with a strong performance in Global Emerging Markets and good growth in Europe and North America, the latter supported by a strong contribution from ATT (Advanced Tissue Technologies).
In Ostomy Care, organic growth, compared with the same category last year, was mid-single digit, with strong growth in Global Emerging Markets, good growth in North America and key European markets. In the new combined category, which includes Flexi-Seal, growth was flat, with the positive performance in Ostomy products offset by expected declines in Flexi-Seal. This was owing to phasing of sales which are expected to normalise across the year.
In Continence Care, organic growth was mid-single digit, benefiting from an increase in reimbursement levels in the US. Organic growth was mid-single digit both including and excluding industrial sales, which was added to the category at the start of this year.
In Infusion Care, organic growth was flat for the first four months, due to the phasing of customer orders and strong prior year comparators, as anticipated. Underlying demand for Convatec’s infusion sets remains strong. The group continues to expect high single-digit growth from this category over time.
In the past four months, the business completed the anti-infective nitric oxide technology platform acquisition and announced a plan to move manufacturing operations from the EuroTec facility in Roosendaal, the Netherlands, to its larger site in Michalovce, Slovakia, which already manufactures similar Ostomy products. The intended move will take place later this year and is part of the simplification and productivity agenda
A raft of new product innovations were also achieved.
The group said: “Given the good organic revenue growth so far this year against tough comparatives coupled with the improving momentum and confidence in the outlook, we now expect organic revenue growth for 2023 to be between five per cent and 6.5%. We continue to expect to increase our operating profit margin on a constant currency basis to at least 19.7% (FY2022: 19.5%).