Smith & Nephew Plc · LSE:SN.
Smith & Nephew — Smith+Nephew — Q2 2025 Earnings Presentation
33 slides from Smith & Nephew's earnings presentation, Aug 5, 2025
Slide 1: Second Quarter and Half Year 2025
Second Quarter and Half Year 2025
Slide 2: Forward looking statements and non-IFRS measures
Forward looking statements and non-IFRS measures This document may contain forward-looking statements that may or may not prove accurate. For example, statements regarding expected revenue growth and trading profit margins, market trends and our product pipeline are forward-looking statements. Phras
Slide 3: Summary
Summary Revenue acceleration in Q2, with 6.7% underlying growth • Sequential improvement across all three business units • c AWM growth driven by rebound in Bioactives Strong momentum in Joint Repair outside China, • Sequential improvement in both US and OUS reconstruction and robotics H1 trading ma
Slide 4: Q2 2025 Revenue
Q2 2025 Revenue
Slide 5: Q2 2025 summary revenue performance
Q2 2025 summary revenue performance Growth by Business Unit* Group 6.7% Orthopaedics $615m 5.0% Sports Med & ENT $479m 5.7% Total revenue of $1,553m AWM • Underlying revenue growth +6.7%, $459m 10.2% +7.8% reported • 110 bps tailwind from FX on reported growth Growth by Region* • One fewer trading d
Slide 6: Orthopaedics
Orthopaedics Sequential improvement in both US and OUS reconstruction Revenue of $615m: Q2 sales factors +5.0% underlying* • Reconstruction and Robotics +5.2%: +5.8% reported • US + 4.0%, fourth quarter of sequential growth improvement in US on ADS basis • Global Knees and Hips +2.9% and +3.4%: • OU
Slide 7: Sports Medicine & ENT
Sports Medicine & ENT Continued strong performance in SMJR and AET through China headwind Revenue of $479m: Q2 sales factors +5.7% underlying* Revenue • Sports Medicine Joint Repair +8.4% (+13.7%of $441m: ex China): +6.8% reported • Headwinds from China VBP implementation continue, begins to annuali
Slide 8: Advanced Wound Management
Advanced Wound Management Growth improvement driven by Bioactives rebound, and strong AWD performance Revenue of $459m: Q2 sales factors +10.2% underlying* • Advanced Wound Care +2.6%: +11.4% reported • Growth in foams, films and skin-care offset by decline in infection management • Advanced Wound B
Slide 9: H1 2025 Financials
H1 2025 Financials
Slide 10: H1 2025 revenue by business unit
H1 2025 revenue by business unit $m (5) 56 2,961 36 47 2,827 H1 2024 Orthopaedics Sports Medicine AWM Translational H1 2025 & ENT FX impact Reported growth 3.9% 3.9% 6.9% (0.3%) 4.7% Underlying growth 4.1% 4.1% 7.1% 5.0% 10
Slide 11: H1 trading income statement
H1 trading income statement 100 basis points of trading margin expansion H1 2025 H1 2024 Reported $m $m growth Revenue 2,961 2,827 4.7% Cost of goods sold (874) (845) 3.3% Gross profit 2,087 1,982 5.3% Gross profit margin 70.5% 70.1% Selling, general and admin (1,421) (1,371) 3.7% Research and devel
Slide 12: H1 2024 to H1 2025 trading margin bridge
H1 2024 to H1 2025 trading margin bridge Revenue leverage and cost savings more than offsetting cost inflation and VBP 1.7% 17.7% 16.7% 1.9% (1.3%) 0.1% (1.4%) Trading Margin Cost Inflation VBP China FX Revenue Operating Trading Margin H1 2024 leverage savings H1 2025 12
Slide 13: H1 trading margin by business unit
H1 trading margin by business unit +100bps +230bps 16.7% 17.7% 15.3% 12.7% 10.4% 8.9% H1 2023 H1 2024 H1 2025 H1 2023 H1 2024 H1 2025 Opex savings and leverage continues across all business units Group Orthopaedics in 2025 -130bps +160bps 2025 trading margin expansion to be led by Orthopaedics 24.4%
Slide 14: Efficiency opportunities 2023-2027
Efficiency opportunities 2023-2027 Additional savings identified as 12-Point Plan productivity initiatives progress Key components of savings Total Gross run-rate savings* Manufacturing & Procurement Indicative phasing of savings now of c.$325-375m in 2027 • Drive manufacturing & quality excellence
Slide 15: H1 operating profit and EPSA
H1 operating profit and EPSA H1 2025 H1 2024 Reported $m $m growth IFRS operating profit 429 328 30.6% IFRS operating profit margin 14.5% 11.6% Adjusted earnings per share ("EPSA") 42.9¢ 37.6¢ 14.1% Earnings per share ("EPS") 33.5¢ 24.5¢ 36.6% Dividend per share 15.0¢ 14.4¢ 4.2% 15
Slide 16: Inventory by business unit
Inventory by business unit DSI below prior year in all BUs; continued improvement remains a focus for 2025 Group and Business Unit DSI* 600 -46 days 900 552 833 811 506 Group DSI down 46 days vs end of 500 800 H1 2024, with dollar value reduction of $69m at constant currency 400 700 Reductions achie
Slide 17: H1 cash flow and cash conversion
H1 cash flow and cash conversion Improved trading and free cash flow on lower working capital costs 600 140% H1 2025 H1 2024 93% 120% $m $m 500 Trading profit 523 471 76% 88% 100% 400 80% Share based payment 21 20 300 60% 487 60% Depreciation and amortisation 212 190 35% 200 405 404 26% (25) (27) 40
Slide 18: Net debt bridge FY 2024 to H1 2025
Net debt bridge FY 2024 to H1 2025 Leverage reflects typical timing of cash generation and dividends Leverage 1.8x 1.9x ratio: 2,709 80 2,747 202 139 (383) Net debt at Free cash Capex Dividends Other Net debt at 31 December 2024 flow pre capex 28 June 2025 18 Leverage ratio at 28 June 2025 is based
Slide 19: Capital allocation framework
Capital allocation framework 1. Invest 2. Acquire • Innovation to drive • New technologies and expand in high growth organic growth segments with strong strategic fit that meet our • Sustainability targets Invest Acquire financial criteria and further embed our ESG agenda Invest Maintain 4. Return 3
Slide 20: Outlook unchanged
Outlook unchanged Underlying revenue growth of around 5% • Ongoing improvement in US Recon through 12-Point Plan; continued strong performance of Sports & ENT (ex- China) and AWM c • Guidance includes c.150bps growth headwind from China; one fewer trading day than 2024 2025 trading margin of 19.0-20
Slide 21: 12-Point Plan update and strategy
12-Point Plan update and strategy
Slide 22: Delivering consistently higher revenue growth
Delivering consistently higher revenue growth Underlying revenue growth 2016-H1 2025 Historic growth COVID disruption Consistently higher growth Sustained acceleration • Shift to consistently higher 10.3% 7.2% growth maintained in H1 2025 • 5% growth delivered despite two 5.3% 5.0% 4.4% 4.7% fewer t
Slide 23: US Recon and Robotics is following the Trauma path to success
US Recon and Robotics is following the Trauma path to success Implant supply, capital deployment, product launches and leadership US Reconstruction and Robotics underlying revenue growth adjusted for average daily sales Q4 2023 Q3 2024 Q2 2024 Implant New product: Acceleration follows key deliveries
Slide 24: Continued high cadence of innovation
Continued high cadence of innovation TRIGEN◊ MAX CORIOGRAPH◊ REGENETEN◊ Clinical evidence Launch of new nailing FDA approval for Now indicated for extra- Publication of RCT system for stable and Shoulder Arthroplasty articular ligament injuries comparing robotic- unstable tibia fractures in Q2 2025
Slide 25: Conclusion
Conclusion We are in the final year of our three-year transformation • Rewiring of Orthopaedics well underway, four quarters of sequential growth acceleration in US Recon & Robotics c • Sports Medicine and Advanced Wound Management have shown consistent momentum • Productivity improvements are visib
Slide 26: Appendices
Appendices 26
Slide 27: Technical guidance
Technical guidance July 2025 Foreign exchange and acquisitions Translational FX impact on revenue growth(1) c.0.5% Acquisition impact on revenue growth - Non-trading items Restructuring costs c. $45m Acquisition and integration $10-15m European Medical Device Regulation (MDR) - compliance costs Othe
Slide 28: Revenue analysis by Business Unit
Revenue analysis by Business Unit 2024 2025 Q1 Q2 Q3 Q4 Full Year Q1 Q2 Q2 Growth Growth Growth Growth Growth Growth Growth Revenue % % % % % % % $m Orthopaedics 4.4 5.8 2.3 6.0 4.6 3.2 5.0 615 Knee Implants 2.7 2.9 0.1 3.2 2.3 0.7 2.9 257 Hip Implants 3.5 4.0 4.0 4.8 4.1 (1.2) 3.4 162 Other Reconst
Slide 29: Quarterly revenue analysis by region
Quarterly revenue analysis by region 2024 2025 Q1 Q2 Q3 Q4 FY Q1 Q2 Q2 Growth Growth Growth Growth Growth Growth Growth Revenue % % % % % % % $m US (0.6) 3.6 4.0 11.9 4.8 3.6 8.7 827 Other Established Markets(1) 4.8 6.9 6.8 8.2 6.7 5.0 7.4 470 Established Markets 1.3 4.8 5.0 10.6 5.5 4.1 8.2 1,297 E
Slide 30: Q2 consolidated revenue analysis by Business Unit
Q2 consolidated revenue analysis by Business Unit Q2 Q2 Reported Underlying Acquisitions/ Currency 2025 2024 growth growth disposals impact $m $m % % % % Orthopaedics 615 581 5.8 5.0 - 0.8 Knee Implants 257 247 3.7 2.9 - 0.8 Hip Implants 162 156 4.2 3.4 - 0.8 Other Reconstruction 35 25 42.4 39.8 - 2
Slide 31: H1 EPSA
H1 EPSA H1 2025 H1 2024 Reported $m $m growth Trading profit 523 471 11% Net interest payable (54) (61) Other finance costs (1) (10) Share of results from associates 1 (1) Adjusted profit before tax 469 399 18% Taxation on trading result (93) (71) Adjusted attributable profit 376 328 15% Weighted av
Slide 32: Net debt bridge H1 2024 to H1 2025
Net debt bridge H1 2024 to H1 2025 Leverage 1.8x 2.2x ratio: 3,086 90 2,747 327 348 (1,104) Net debt at Free cash Capex Dividends Other Net debt at 29 June 2024 flow pre capex 28 June 2025 32 Leverage ratio at 28 June 2025 is based on 12 month rolling adjusted EBITDA
Slide 33: Trading days per quarter
Trading days per quarter Q1 Q2 Q3 Q4 Full year 2023 64 63 63 60 250 2024 63 64 63 62 252 2025 62 63 63 63 251 2026 61 63 63 64 251 33