How did SNN's earnings surprise investors in Q1 2021?

Smith & Nephew's (SNN) failure to meet investor expectations in Q1 2021 was due to a combination of factors that significantly impacted its financial performance.

1. **Revenue Decline**: The company's revenue fell by 11.2% year-over-year, with Orthopaedics segment revenue dropping by 13.7%, Sports Medicine & ENT segment revenue declining by 13.2%, and Advanced Wound Management segment revenue decreasing by 5.1%. This decline was primarily attributed to the ongoing impact of COVID-19, which disrupted healthcare systems and postponed elective surgeries, thereby affecting demand for SNN's products.
2. **Trading Profit Margin Compression**: The Group trading profit margin compressed from 22.8% in 2019 to 15.0% in 2020, reflecting inefficiencies in operations and increased costs. This reduction in profitability further underscored the challenges faced by SNN during the quarter.
3. **Net Income Reduction**: The net income experienced a significant decline of 25.3%, with EPS also dropping by 25.0%. These figures indicate a substantial shortfall from expected earnings, contributing to investor disappointment.

In summary, SNN's Q1 2021 earnings fell short of investor expectations due to a combination of revenue decline, trading profit margin compression, and reduced net income, which together painted a bleak financial picture for the period.