Smith & Nephew Stock Earnings Reports

Key points for investors: Smith & Nephew delivered a solid first half (Q2 revenue $1.6bn; H1 revenue $3.0bn) with 6.7% underlying quarterly growth and sequential acceleration across regions and business units. Orthopaedics is showing sustained improvement (fourth consecutive quarter of U.S. Recon & Robotics recovery), Sports Medicine and Advanced Wound Management (AWM) delivered strong growth (AWM +10.2% in Q2) and new product launches/innovation continue to drive performance. Profitability improved: trading profit up 11.2% to $523m in H1, trading margin expanded 100 basis points to 17.7% and management reiterates full‑year margin guidance of 19%–20% (with a planned further step‑up in H2). Cash flow and returns: H1 trading cash flow $487m, free cash flow almost $250m in H1 and management expects well over $600m free cash flow for FY2025; a $500m share buyback has been announced for H2, to be fully funded from 2025 cash flow and existing balances while keeping leverage broadly stable. Transformation progress and cost savings: the 12‑Point Plan / ZBB has delivered cumulative savings of ~$210m to date, with run‑rate savings expected of ~$275m–$285m by end‑2025 and another $50m–$100m in 2026–27; Orthopaedics delivered ~230bps of margin accretion in H1. Key risks and headwinds: tariffs expected to be a $15m–$20m net headwind (mainly H2), ongoing but easing VBP impact in China (including Sports VBP and future skin substitute Medicare proposals that could pressure 2026 Wound revenue/profitability). Management cadence: continued focus on inventory reduction, margin conversion in H2, further innovation rollouts, and a Capital Markets Day planned for December to outline the next strategic stage.