ConvaTec sees FY revenue growth at top end of guidance

(Sharecast News) - Medical products company ConvaTec said on Wednesday that it expects to deliver full-year revenue growth at the higher end of guidance following a better-than-expected performance in the third quarter.
In the three months to the end of September, revenue rose 6.5% on the year to $493m. This was driven by significant growth in Infusion Care, continued strong growth in Continence & Critical Care, an improved performance in Advanced Wound Care and a flat performance in Ostomy Care.

The company said the Covid-19 pandemic continued to drive "less predictable" demand, particularly in Advanced Wound Care and Critical Care, but underlying customer demand for the group was encouraging.

As a result of its better-than-forecast Q3 performance, it now expects to be towards the higher end of its constant currency revenue growth range of 2-3.5% for 2020.

ConvaTec does not anticipate fourth-quarter year-on-year revenue growth due to the impact of the skincare business disposal, challenging 2019 comparatives and increasing uncertainty due to rising Covid cases.

The constant currency adjusted EBIT margin is expected to be between 18.5-19%, "reflecting, in light of Covid, the proactive deferral of some recurring transformation investments into 2021 and certain operating expenses continuing to be lower, coupled with some operational gearing".

Chief executive officer Karim Bitar said: "We delivered a good trading performance in the third quarter. We continued to respond well to stronger than anticipated customer and patient demand, particularly in our Infusion Care and Continence and Critical Care businesses. We now expect to deliver revenue growth at the higher end of our guidance range and to exceed our previous margin guidance for 2020.

"There is still significant work ahead of us as we pivot to sustainable and profitable growth, but I am confident in ConvaTec's long-term growth prospects."