Convatec reiterates 2020 guidance, will pay final dividend

Medical device maker ConvaTec backed its 2020 guidance on Thursday and said it is planning to pay a final dividend, but conceded that risks across the business have increased due to the coronavirus pandemic.

In an update for the three months to the end of March, the company said group revenue rose 6.9% year-on-year to $640m as customers increased their inventories to ensure supply chain resilience.

Revenue in Advanced Wound Care was up 1.8% to $132m, while Ostomy Care revenue increased 6.6% to $127m. Continence & Critical Care revenue was 9.9% higher at $119m and Infusion Care revenue rose 11.8% to $82m.

The company said it still plans to propose that the 2019 final dividend is paid, subject to approval at the annual meeting next week. "This reflects the board's confidence in the future performance of the group and its underlying financial strength and cash generation," it said.

ConvaTec maintained its 2020 guidance of 2.0% to 3.5% constant currency revenue growth and between 16% and 18% constant currency adjusted EBIT margin, but said it was "cautious" about the increased risks.

"Q1 included the impact of customers increasing their inventories to ensure supply chain resilience and a weak prior year comparator. However, Covid-19 has introduced more uncertainty into the environment in which we operate.

"We expect Advanced Wound Care revenue, which is more exposed to elective procedures and hospital visits, to be adversely impacted. We are aware of external risk factors, particularly in relation to the supply chain, and we are focused on proactive mitigation."