Q1 2022 Smith & Nephew PLC Trading Statement Call
I was in Memphis.
Just orthopedics manufacturing facility.
Advanced wound management center in Fort worth a.
A robotic center in Pittsburgh and of course, our global headquarters here in the U K.
I've been meeting colleagues and customers seeing our manufacturing and distribution network for myself and getting my hands on the technology.
There is still more to see to buildup the picture of where we have opportunities and challenges.
I'll be able to say more about my immediate priorities when we get to our first half results.
Third is what I came here to do Smith <unk> nephew has set out a clear strategy for growth.
With medium term financial commitments, which by fully embrace.
Strengthening the foundations like our supply chain accelerating growth profitably with how we target resources and transforming long term growth innovation and acquisitions.
These are the right components now it's time to get them done.
At pace.
My role is to bring out the best and Smith, <unk> nephew and deliver on the targets of consistent 4% to 6% organic revenue growth by 2024.
With a trading margin at or above 21%.
So for today I'm pleased to see a good start to 2022 to take you through the detail of that I'll handover to add funds for us.
Thank you Deepak and once again welcome welcome to Smiths and very much get fully to working with you.
Moving to the business of the day I know, it's a busy day of results from <unk> today are being respectful of your time, we'll keep nickel $2 45 minutes.
First I'd like to highlight some encouraging trends in the quarter that will explain in more detail shortly.
Two of our three franchises ports may be seen on E&P and advanced wound management continuing to perform well.
With recent launches increasingly contributing to growth.
We're also strengthening the base in orthopedics with the rollout of the cement less knee offering in the U S.
We've seen an improvement across elective procedure categories as the effects of the omicron wave diminished in the U S and Europe , and particularly in areas that had previously been slower to recover like needs on E&P and.
And as Deepak mentioned the growth in the first quarter is a good start towards our 2022 targets.
Moving to the detail group revenue was $1 3 billion in the quarter with five 9% combined growth under three 3% reported growth.
All regions on franchises grew over the first quarter of 2021.
Looking by geography by established markets businesses recovered strongly from the impact of Covid wave at the start of the year in.
In the U S infection, Sam quickly from the peak in mid January .
Less procedures volume recovered on business accelerated III paper Orienting Kumar grain three 1% for the quarter as a whole.
Other established markets grew five 9%, mainly driven by Europe with the UK on southern Europe rebounding strongly.
Europe has not been slower to recover from the impact of Covid on procedures, but revenues now approaching pre COVID-19 levels again.
Emerging markets revenue grew 14, 3% within that China still return of Covid outbreaks and local lockdowns in some cities late in the quarter, while our China business to inquiry with delays to the implementation of the <unk> tender more than offsetting the <unk> headwind.
Our expectation is for the rollout of EVP in Q2, and we've seen the first provinces going live.
The emerging markets, excluding China continued to recover with strong double digit growth across India, the middle East and Africa, and Latin America.
By franchise Orthopedics returned to growth at two 6% sports may be seen on the A&P grew eight 6% and advanced wound management grew 8%.
I'll now cover in detail each frontline consulting with orthopedics on slide six.
On the business rebounded strongly driven by recovering primary knee replacement volumes with evidence of postponed procedures returning.
This small decline for hips reflects a strong comparator in Q1 2021, and also market that had been more resilient and needs throughout the pandemic.
Rolling out <unk> cement less knee is a key project for this year.
<unk> performing well in terms of cases, and set deployments and surgeon feedback around procedure speed and quality of fixation has been excellent.
Although rig construction fell 19% also largely reflecting a strong quarter, one 2021 on trauma and extremities declined three 8% with varying performance by region on category.
Looking forward, we've continued to develop our offering we five 10-K clearance of cement less knee software on our vertex platform achieved in April and this will be available to core customers as a software upgrade and we are now preparing for the launch.
We saw another strong performance from the sports may be seen on Yankee franchise as shown on slide seven on.
I will support may be seen I'd like to call out two trends firstly, there's a strong recovery in the knee repair market. This was one of the areas most impacted by Covid on these now benefiting more as established markets return to normal levels of physical activity with.
The contribution of recent launches is also increasingly important phosphate flex werewolf, <unk> <unk> and <unk> not less all continuing to grow strongly and are making a meaningful contribution to vehicles sports medicine growth rate.
Our first topic, enabling technology was a mixed picture this quarter with good growth in some areas like <unk> management on video, but softer quarter in core correlation on patient positioning.
On A&P grew more than 20% as case volumes continue to recover a nose and throat procedures, along with ongoing surgeon weakness.
And moving to slide eight advanced wound management growth was broad based with consistent strong performance across the segments and regions advanced wound care was particularly strong in Europe with double digit growth in the region by category Global growth was driven by living portfolio as well as film dressings, which are more associated with <unk>.
<unk> procedure volumes.
<unk>, including another good quarter for central with improvement in the long term care channel, adding to the better execution of the recent quarters.
Skin substitutes improved as the quarter progressed clinical evidence and as you know clinical evidence is an important part of our strategy in wound and we've added further differentiation with data published in March showing that compared to leading competitors are product graphics half recurrence rates for diabetes food sources one of them.
Major categories of chronic wounds.
And finally advanced wound devices grew 18, 6% again, driven by both <unk> and <unk> in negative pressure wound therapy.
As indicated by Deepak here earlier advancing our strategy for growth remains our focus.
On slide nine shows an example of a great progress this year on each of our <unk>.
For instance on productivity, we've implemented a new go to market model for <unk> in China. We started work on our portfolio simplification initiatives, and we're making progress improving our supply chain.
On commercial execution, we focus on launching flawlessly and at scale.
<unk> constantly rollout is underway and we.
We are preparing for the key launches later in the year, including the next generation shoulder and negative pressure wound therapy products.
We are also starting to donating three of our key innovation projects for 2022 with clearances for the high heat Madeira, which is our advanced planning software for hip surgery and for cement less knee indication for robotic assisted surgery on Corey.
And of course M&A has continued with acquisition of engaged surgical in January bringing the only segment less partial knee system commercially available in the U S into Smith <unk> nephew.
I'll now finish with our guidance for 2022, which is unchanged we continue to target underlying revenue growth of 45%.
<unk> margin expansion of around 50 basis points.
Five 9% underlying growth in the first quarter is a good start even if it's just one quarter honestly work to do towards the full year goal.
You will see that the range implies average daily sales continuing to build throughout the year that is in line with our assumption of volumes not being materially constrained by Covid outbreaks for the rest of 2022.
It's also consistent with the improvements in orthopedic momentum that we expect as the year progressive including offsetting the headwind of GBP from the second quarter onwards.
On the trading margin and no inflation is an important topic in the market and as a reminder, it is one of the headwinds included in our full year guidance.
Clearly there is still volatility around various components and raw materials, but the view of the headwinds. We gave in February was based on a range of assumptions, which we continue to manage.
And with that I'll hand back to Japan.
Ken Krause for us.
So it's good to see the positive start to the year, we're making progress on the strategy and the environment is moving closer to normal whether you look at the elective procedures coming back or a return to relative to double AOS in March.
For myself I'm enjoying getting into the details of the business I heard a lot from the outside about the quality of Smith, <unk> nephew's technology and its that together with the strength of our talent that has really stood out in the first few weeks.
So starting to build up a picture of how we can drive greater performance and value and I am looking forward to discussing this more in due course and meeting you all in person.
And now we can move to your questions with false Wall Street can lead.
Thank you.
I would like to ask a question. Please press star followed by the number one on your telephone keypad. If you change your mind. Please press star followed by the number two requirement to ask your questions. Please ensure your mute locally.
Our first question comes from Patrick Wood from Bank of America. Patrick. Please go ahead.
Perfect. Thank you very much for taking my question I'll keep it to one given the time.
Just curious.
Talk a little bit about the <unk>.
Sequential growth through the quarter and it sounds like.
North America, you saw a sequential acceleration, particularly in February .
March was that also the case in China.
China has its own specific component, but maybe ex China.
General and EMEA did you see a sequential improvement as the quarter went on perfect. Thank you.
Good morning, Patrick Thanks for the question so clearly the the growth.
<unk> improved for the quarter on the basis for two factors one as we were coming out of the <unk> impact we saw U S recovering.
I guess from late January .
Into February Europe , a little bit later.
Then in terms of the the other market.
Really dependent I mentioned on the sale and the presentation that China was impacted later in the quarter Shanghai came on a few other cities came into lockdown.
And that will be hard to predict.
How that will evolve.
Certainly we had a strong performance in our performance in India and in Middle East Africa, We had seen a little bit of impact early as well in <unk> throughout the quarter I would say the performance was improving.
It reflects both.
Of the the lessening impact of Covid, but as we've mentioned before the fact of the hospital.
Adapting their procedures and therefore, we do see the return of.
Elective surgeries.
Thanks, so much.
Our next question comes from Hassan Al <unk> from Barclays. Please go ahead.
Alright. Thank you for taking my questions I have two please.
Firstly, if I can ask you Deepak.
Thanks for your comments and I look forward to your update in the first half I Wonder if I can ask for your initial impressions of the business. Since you have joined where you think Smith <unk> nephew performs well.
There is upside in what is really needed to drive an acceleration in the top line at a very high level over the medium term.
And secondly, and Francois on guidance clearly a very strong start to the I Wonder if you could walk me through the puts and takes when thinking about the full year guidance range and whether the expectation of growth momentum building over the course of the year still stands. Thank you.
Thank you for the question So I'll go first.
So im a little less than.
And so making more ways my way around the company informing our views as you can imagine.
But what I would note is as I look at the opportunities before us and compared to the challenges that we face I'm struck.
By the fact that we have far more opportunities to reduce that.
We do challenges.
The first observation I had was really struck by the energy and optimism of the team.
Admittedly, it's been a few challenging years and I expect it to be met with some <unk>, but it was actually quite the opposite.
Farmer teams were super energized and poised to deliver.
Other thing was I was struck by the strength of our portfolio of innovation and I heard that articulated by the company prior to joining.
And as Ive had a chance to engage.
With our products and to see firsthand the innovation that is.
Compass in the products and what I see in terms of our near term pipeline I was super impressed by.
What I saw for example, I spent time in our Pittsburgh facility, Our center of excellence in Robotics, and I was really struck by the energy of the team the spirit of innovation.
Thats housed there.
Really the mindset that we have and I think we have an opportunity to better communicate that to our customers and.
Two other stakeholders as well.
The third area really was around talent.
Many of the folks that I met.
Deeper a couple levels deeper into the organization.
Have joined us in in the last two years or so.
They've notably joined us from larger competitors.
And really from from other leading companies in the fact that we've been able to attract.
Talent into our company.
Based on our reputation of our culture, and our products I think bodes well and I'm excited to be part of it and.
As we committed we delivered a strategy or communicated a strategy back in December .
And I fully.
A month and embraced that strategy and my focus really is on <unk>.
<unk> performance and driving execution against our strategy to deliver on our midterm commitments of 4% to 6% underlying consistent growth.
Above at or above 21% margin by 2024.
So I guess, that's a good segue talking about performance to pick up on <unk> question on the guidance on good morning Ashwin.
Pte, one that they will to making December the round table. We had 495 I hope, we will get to meet face to face.
In 2022.
But clearly on the guidance.
Yeah.
One quarter is not enough to change the full year picture and you would expect me to say that but clearly.
We are confirming our guidance today.
And whilst the recovery from Omi Con in established market was a little faster than we'd expected. They all know new restrictions in China.
Before we do have an impact.
I expect the impact to be sort of a neutral for the year.
More importantly, when you look at our guidance. It does assume a continued continuing buildup on the momentum and when we look at my numbers internally, we do see we have to increase the average days sales throughout the rest of the year and therefore that assumes that volumes are not materially constrained by Banco.
And as you know they still also headwinds to come in in terms of the GBP in in China for instance from Q2 onwards. So.
Clearly.
Good start.
Confirming helping us confirm being on track for the guidance for the full year.
Revenue level I'm sure you won't maintain to cover as well as the margin on the guidance on the margin and again here, we are not changing our guidance. We continue to expect to deliver around 50 basis points expansion and that will be driven by.
Operating leverage from the revenue and driving.
Patient sees on productivity to offset the significant headwinds in terms of cost inflation and the impact of the China Pvp tender.
Perfect. That's really helpful. Thank you and I look forward to seeing you both <unk>.
Thanks Esther.
Our next question comes from David Adlington from Jpmorgan. Please go ahead.
Hey, guys. Thanks for the questions sorry to fix on the negatives, but maybe we could just get a bit more color in terms of what was happening in terms of both trauma, well and expect to see more of a recovery in that business as the economy recovers.
AEP when you pull that calculation.
<unk> positioning is being particular headwinds just color on that would be useful.
And then just a follow up on pricing just wanted your latest updates in terms of where you are to the pricing given the cost inflation environment.
Yes.
Thank you David.
Yes.
Are you pleased with our progress in the quarter, but you are peaking and peaking on two important point.
<unk> was clearly.
During the quarter on the <unk> mixed picture, because we had a strong quarter in areas like cast fleet management on video.
Softer quarter in core correlation and patient positioning, but what we've seen nice is a strong recovery in knee repair procedures in particular, and therefore procedure volumes should have AEP at Ats, we progressed through the year.
Trauma.
Again needs to be.
A mixed picture.
The performance has been varied by region and category. So there's a number of factors that have contributed to the slower quarter, but again as we look forward with.
Continuing to integrate.
<unk> extremities business can take Ron Thats almost finished and therefore were looking forward to launching the next generation shoulder later in the year.
And then on pricing I mean clearly.
<unk>, it's an important area to focus on.
Many of US have not worked in an inflationary environment.
And we are being <unk>.
Traditionally our industry as you know has been more has seen more price erosion. So we need to change.
To change that we are very focused on understanding what cost what activities. We can postpone now as you know and you've heard US say, we cannot postpone 100% of the price inflation of the cost input inflation that we've seen but we are active where we can.
To give you a few example, we've increasingly prices where we can we've certainly.
I did for instance, inflation clauses in new contracts and outside of <unk>.
The areas, where we have long term contracts.
We've been able as well to to push to push price increases on A&P is for instance, a category where we'd say we've had some early successes with pricing.
As I said.
<unk>.
It's too early to say by how much we finished at a group level and we cannot pass around a 100% over the highest cost.
And as we say inflation will be a headwind in the year, but we are certainly very active on looking to mitigate where we can.
Maybe just as a follow up was still negative in the first quarter when do you expect positive.
So it was it was in line with historical averages.
Okay.
Then maybe just one quick follow up it doesn't give us the FX impact.
On the top line.
Any update on the on the margin.
So as you know we do usually.
Usually see.
The impact of FX.
More on the revenues.
And not so much on the on the margin. So at this stage, we don't see that.
As well.
We hedged.
For about 12 months in advance so it's very it's very it's neutral.
Relevant to the guidance, we've given for this year, because 2022 is mostly hedged.
Alright, thank you.
Our next question comes from the line of Ronald Clark from RBC Capital markets. Please go ahead.
Hi, there.
Thanks for taking the questions.
Some of the results I'm just wondering how much has changed.
<unk> contributed to growth in the quarter I guess.
Countries.
So it has been it's been quite positive posed to drive us have you been able to ride this wave and taking market share.
Good morning, Jack.
Clearly <unk> area.
Of growth we've seen.
With Covid the acceleration in terms of the move to ASC.
Now, we're not going to comment specifically in the quarter, because I think it's about the trend in <unk>.
For us the AFC as always been important we have seen in terms of the joint replacement procedures.
It's in the low double digit the growth has been in the low double digit.
And that's continued to diebold.
<unk> over the year.
As you know in ASC the procedures the proportion of procedures. These higher Nissan lowering heaps and for US certainly installed about 40% of our procedures are taking place in Acs.
It's hard to quantify and we haven't quantified what's our target today neither of the peers.
But clearly.
We believe that the.
The AC shares in joint replacement.
Similar to our overall shares.
Importantly, as well would that add to that is the segment list is important in ESP setting.
The slower procedure time.
You're right for the patient and therefore, it's a real opportunity in the ASC setting.
Okay, great. Thank you very much and then I guess just wanted one quick other one if I can squeeze.
So how are you seeing staffing shortages.
<unk> develops in the industry.
So that guidance that he is a great question.
But the other one was a bad question sorry, Jack.
Clearly.
Baxter has been a topic holding shoot in many markets, but I would say more in the U S.
Yes.
The U S has seen a shortage of a stocking.
<unk> now.
So pre COVID-19 trends, whilst COVID-19 has accelerated the trend of nurses deciding to retire or move on.
Also staff was.
<unk> taken Neil as well, particularly in December there was no longer a longer term trend pre COVID-19 .
In the USA was becoming harder to train recruit on retained nesting soften.
Hospitals are adapting.
They are using <unk>.
Discussed before they call traveling nurses there.
They're doing what they can to mitigate.
But that remains the constrained on hospitals in the U S. Because even once you're fully staff you need you need for the time for the team to get together.
Work at speed.
At <unk> as well of course in a hospital setting.
So that remains a feature of the industry.
And it's something that the hospitals need to work through.
Okay, great. Thanks, very much look forward to making your presentation here.
Thanks Jack.
Our next question comes from the long enough, where warnaco deep Johnny Vo from Goldman Sachs. Please go ahead.
Thank you guys for taking my questions I'll keep it to two please.
<unk>.
Just wanted to follow up on some of the pricing conversation and Praful I'm, just curious if youre seeing any signs of accelerating pricing pressure at all within hips and knees I think the more we speak to hospitals, they're obviously facing some pretty difficult environment financially you touched upon some of the higher wage growth.
We are increasingly getting the sense that disease.
Our back on the agenda in terms of source of cost savings. So I'm just curious if you've noticed anything at all.
And maybe just kind of related to that in the ASC piece, whether you are starting to have conversations about.
ASC pricing that diverges from what the inpatient pricing looks like.
So that's my first question and my second question is for Deepak apologies, but.
You said you believe it is very much shared the strategy at the target I guess, the one thing you haven't touched upon is the shape of the portfolio and I think with prior management teams. That's definitely been one of the big conversation. So Im just curious if you have any initial thoughts as you're spending time with the business on the shape of the current portfolio.
Oh and weather.
As a newcomer into the business that makes sense strategically for you. Thank you guys.
Okay.
So I'll take the price of a veronika good morning, sorry, very very tough.
The no I mean, the answer even though we have not seen.
Additional pricing pressure on hips and knees osce's to your question.
To my private previous ones that we are discussing where we can we're managing.
<unk> be no change to the trend yet and I do think.
Actually.
Customers hospitals understand it's a different environment.
And our commercial teams also understand it's a different environment. So.
Thank you.
Haven't seen any changes at this point in time on political.
Portfolio.
Veronica it's good too good to speak with you again in this in this different context. So thanks for the question.
Obviously, I am here less less than a month, so it would be premature.
Premature for me to.
To comment, but I'll reiterate.
That when the strategy was set forth in December it was on the basis of.
Looking at it quite thoroughly analyzing.
The various options.
At the time.
Put forward a strategy based on those those considerations.
<unk> had a chance to engage with that and assess that early on.
As I indicated earlier fully fully embrace that and but I also.
Have indicated as I see.
Significant opportunity with the portfolio that we do have I think we can execute.
Better and drive a greater level of performance with what we've got and that's remains my near term focus.
I'll kind of leave it at that growth.
Understood.
To hear you as well Deepak look forward to seeing you perfect. Thanks, guys.
Yeah.
Our next question comes from the line of Tom James from Bernbach, Tom. Please go ahead.
Hello, Good morning, two questions and first of all welcome to the business to APAC.
Our first question is just on the supply chain is ready I just wondered if.
You could explain to what extent growth in Q1.
It was hampered by lack of raw material lack of local production in any sense, but also.
Whether there was any.
And a boost to revenues in any of the franchisees that came from resolution of previous supply chain bottlenecks.
Recall, you had a bit of an issue to get a hold of renewable wind business and I was just wondering if some of the.
European performance was a bit of a catch up effect from resolving that particular supply chain bottleneck.
And then my second question is just go back to another question actually on the on the run rate growths have been I would assume January as a whole sadly soft considering homochromous in full flight and that particular months, so to get to sort of 6% for the quarter does imply call. It gross who's tried to begin this at a high single digit range towards the end.
For the quarter.
Is that the kind of momentum you think you can carry on into and through Q2 or is that too optimistic assumption.
For us because the comps in Q2 or kind of all over the place even though you were down 13.
Q2, 2020, and up 30, something in Q2 2021. So the comp is isn't much help ready. So if you can kind of.
Interesting to get a feel for what to kind of exit rate from the quarter Wassa in terms of revenue momentum.
So today's per sales however, you want to phrase it.
Yeah.
Good morning, Tom hopefully the revenue on a constant all over the place.
So in terms of.
Question around.
Supply supply chain.
Clearly we've continued to work on supply chain and making good progress on the elements that are specific to Smith <unk> nephew.
You know that we can kind of control.
No.
The issues, we've talked about before in Memphis.
In terms of staffing level that is resolving we're continuing to work on our sales operation planning et cetera. So some good progress on tracking.
Two to the plans we had now you also mentioned the <unk>.
Raw material, that's more linked to global supply chain disruption, we do continue to see disruptions in electro components on it.
Electromechanical components.
And the situation remains volatile and difficult to forecast now having said that our teams are working hard to prioritize.
Our suppliers so we've got.
Control towers in place.
Involving relationship with our top suppliers, making sure we're very agile we do spot buys.
But it's clear that disruptions continue.
Yes.
Impacting the quarter, we havent pool detail because clearly.
So the FX have been offset by a good trading.
But that remains a constant factor that we are working day in day out on the factories I've got to have that all the time to make sure we are weary.
Phone to any disruption with T <unk>.
Now.
Was it was there'll be able to catch up in Q1 from that it's not that significant but it's fair to say that in Europe .
In EMEA in the inward.
And as you point out there's a little bit of an element of that which we have not quantified.
Now when you look at the.
Growth rates by quarter on the variability.
No.
It does assume so so the exit rate in the quarter had improve was slightly offset by China, but was improving in the in the U S and EMEA as I said.
Earlier in the call and all.
The guidance assumes.
Building momentum throughout the year in terms of the average daily sales and continuing to build momentum in the second half of the year, particularly as we launch new products.
I would also say that.
You've got to take into account that in Q from Q2 onwards, you'll have the impact.
<unk> EVP.
And finally I would say.
Where should return compared to last year as the seasonality of the business where.
Q3 is usually a little bit.
<unk> is impacted in EMEA by everybody going on holiday.
Apart from that and so you would expect the normal seasonality, we've seen traditionally but overall it does mean, increasing momentum and continuing to build on the good.
In the first quarter.
And then maybe one just follow up questions David on the AUC business It did seem that.
The capital equipment towards areas of the business, we were perhaps a little bit weaker than the consumable type areas of the business.
Is that a reflection of the pressure on hospitals that.
You referred to or does that just sort of normal quarter on quarter duration I'm. Just wondering if there's anything we should be concerned about the health of hospital Capex environment.
Well it was actually Interjecting, because I guess.
The assumption is not correct, it's not a decline in that.
In capital, it's actually consumables, when I referred to the softer quarter in correlation.
Ablation et cetera that is consumables so.
Not concerned.
In terms of the capital aspect and as I said knee repair procedures.
Coming back recovering and therefore, we see procedure volumes should have.
Franchise going forward.
Super.
I'll get back in the queue. Thank you very much.
Our next question comes from the line of Kyle Rose from Canaccord Genuity coil. Please go ahead.
Great. Thank you for taking the question.
I wanted to ask on the M&A landscape in the appetite for M&A.
Obviously, you did the engaged surgical deals congratulations on that but I'm just wondering should we expect M&A to slow down in the near term.
The bark ramps up to speed and get more of a sense of the business or or is there any appetite for M&A and maybe more in the near term.
Yeah, I'll take that call so.
The strategy that we articulated included.
Acquisitions M&A is a key component.
And we've been active in that area as you know we will.
We will remain.
So it's a key component strategy.
Expect there to be a change just because.
I'm on board as I mentioned.
<unk> is a place we're focused on executing against all elements of our strategy and that includes the acquisition fees.
Great and then just one follow up is just can you remind us of the timing of when we should see the cement less knee.
And the engaged surgical on Corey at least with respect to the United States markets.
Okay.
We are in the process of rolling that out as you know, but getting the indication. We're looking at 2023 and we'll get back to you in terms of the quarter, but right now we're targeting 2023.
Great. Thank you for taking the questions.
Thanks Carl.
Our next question comes from Oliver Metzger.
Oliver Please go ahead.
Yes.
Good morning.
Two questions from our side one is on sports medicine joint repair So you talked about.
Procedural recovery repair just to understand the dynamics do.
Do you see the overall recovery of cortex sports related injuries or what's the strong deal momentum driven more by let's say no we saw ski season.
Which basically did not.
To take place before.
Before at least in Europe . The second question is.
On advanced wound care.
So also Tom mentioned the impressive momentum so you mentioned Europe , performing pretty well could you comment.
You've seen the underlying market development in the first quarter.
Good morning, I'll leave us so in terms of the sports.
Meg performance in knee.
We have seen a strong recovery.
Really driven by the return to normal levels of activity in.
The activities that did not happen in the past that's gone.
Unfortunately, or fortunately for some people did not get an injured. So to your example, it's really a return to support really a return of people going skiing, and being a little being prudent and sometimes and that.
That's really linked to your point to the return of normal levels of physical activity.
But I think as.
As well in the future.
More of a contribution of our new products.
On wind in Europe .
Our performance was strong.
Across the various categories, but particularly in terms of leaving.
I think we haven't seen all of the competitors' data so it's a little bit hard to compare.
<unk>.
We feel that the European performance was strong in the wound franchise.
Okay. Thank you very much.
Yes.
Our next question comes from Julian Tomas BNP Powerboat Julien. Please go ahead.
Yes, hi, good morning, enforces and good morning, Deepak and congrats on the new role.
Thank you Julian answered Brooks.
But I would just could you just remind us what could be the impact of edp on your business in the coming quarters, because I think you provided some information.
In the past.
So wondering whether the actual implementation by the various provinces has led to anything surprising when you're on your side or is it very much.
Along the lines of what you expected.
Okay.
Good morning, Julianna so the.
In terms of the GBP by the end of the quarter I think from memory was three provinces.
Had AD launched on.
The rollout is continuing as expected.
In the knees on heat.
And as we've mentioned.
We've estimated the impact of GBP to be about 60 basis points.
On the margin.
Clearly the significant headwind on the revenue for <unk>, so, but we've taken actions to mitigate.
In terms of our go to market model.
And the price so.
We will continue to refine the estimates as we go through the year, but in terms of your question. It was early days. It was towards the end of March that the provinces started implementing and we haven't seen anything that surprised us actually last week, Deepak and I on the call with the Chinese team that we the team in China and they didn't flag.
The thing that would give some sense, so very much everything rolling out as expected.
Okay. Thank you very much.
Welcome to Union.
This is the end of the Q&A session I will now hand back over to <unk> for any closing remarks.
Thank you all for attending our call and I appreciate your interest and engagement and I look forward to seeing you all over the coming weeks, so with that I will.
And then the call. Thank you.
Thank you.
This concludes today.
Okay.
Okay.
Yes.