ConvaTec Group (CTEC) H1 2024 earnings summary

Executive summary

• Achieved strong, broad-based organic revenue growth of 6.6% in H1 2024, with all four business categories contributing positively.

• Operating profit margin expanded to 20.7% in constant currency, up 40 basis points year-over-year, with earnings and free cash flow to equity up $47 million to $57 million.

• Innovation pipeline delivered new product launches, driving segment share increases and strong clinical evidence for key products.

• Confirmed 2024 and medium-term guidance, expecting to be at the upper half of the 5%-7% organic revenue growth range and double-digit EPS and FCF growth.

• Strategic focus on chronic care, innovation, operational simplification, and building commercial capabilities is driving sustainable, profitable growth.

Financial highlights

• Organic revenue growth reached 6.6% in H1 2024, with total sales rising from $1,055 million to $1,113 million.

• Adjusted operating margin was 20.7% in constant currency, up from 20.3% in H1 2023; reported margin 13.4%.

• Adjusted EPS was flat at 6.8 cents, with free cash flow to equity at $57 million, up $47 million year-over-year.

• Leverage reduced to 2.3x net debt/adjusted EBITDA, down from 2.5x a year ago.

• Interim dividend increased by 3% to 1.822 cents per share; contingent consideration payments for acquisitions totaled $70.9 million.

Outlook and guidance

• On track to deliver 5%-7% organic revenue growth for 2024, expecting to finish in the upper half of the range.

• Operating profit margin expected to be at least 21% in constant currency for 2024.

• Double-digit growth in adjusted EPS and free cash flow to equity anticipated for the full year.

• Mid-20s operating margin targeted for 2026/2027, with margin expansion driven by mix, productivity, and efficiency.

• Segment guidance: wound care and ostomy care at mid-single digit, continence and infusion care at high single digit growth.