- Sales and profit outlook upgraded
- All divisions contributing
- Strategic plans paying off
Global medical products company Convatec (CTEC) jumped 20% to top the FTSE 100 leaderboard after upgrading full year sales growth and margin guidance in an unscheduled trading update.
It is one of the biggest one-day advances in the shares since the business listed on the stock market in 2016 and means they are outperforming the blue-chip benchmark in 2024 after sliding by a quarter since March.
The company said it is on track to deliver double-digit EPS (earnings per share) growth in 2024 and 2025 based on a broadening product portfolio, new product launches and ongoing productivity initiatives.
RAISED OUTLOOK
Full year organic revenue is now expected to grow between 7.25% and 8%, an upgrade on earlier guidance of 6% to 7%, while adjusted operating margin is expected to be more than 21.5%, up from greater than 21% previously.
CEO Karim Bitar commented: ‘Convatec has delivered faster broad-based sales growth in the second half and operating margin is tracking materially ahead of H1, driven by strong execution of our strategy and lower inflation.
‘For FY25, we expect to grow sales and operating margin further, and to deliver another year of double-digit growth in adjusted EPS and free cash flow to equity.
‘This growth is driven by our clear strategy, our strongest-ever new product pipeline and the focus on execution excellence by our team of more than 10,000 colleagues around the world.’
The company appears to be firing on all cylinders with all divisions contributing to growth in the first half.
Advanced wound care, continence care and infusion care all delivered high single-digit percentage growth in the first half while ostomy care grew by mid-single digits.
FASTER GROWTH FOR INNOVAMATRIX
Convatec also gave an update on its InnovaMatrix product which caused some disappointment in May after the company said is not yet on the approved Medicare list for insurers.
Sales have increased 40% year-to-date and full year sales are anticipated to be around $100 million with faster growth delivered through channels not covered by medical insurance.
The company said: ‘InnovaMatrix® is an excellent product which is delivering strong real-world results for patients and is trusted by clinicians. We continue to believe InnovaMatrix® should be included in Medicare coverage for VLU and DFU treatment. We will publish further real-world evidence imminently.’
