Smith & Nephew Earnings: Steady Results Reflect New Stability

Smith & Nephew designs and manufactures orthopedic devices, sports medicine and arthroscopic technologies, and wound care solutions. The UK-based firm generates roughly 41% of its revenue from orthopedic products and 30% from sports medicine and ENT. The remaining 29% comes from the advanced wound therapy segment. Morningstar analysts expect steady results from Smith & Nephew, highlighting the company's new stability.

British medical technology firm Smith & Nephew (LSE:SN, NYSE:SNN) reported robust financial results for the second quarter and the first half of 2025, reflecting strong revenue growth, margin expansion, and cash generation. The company's performance was driven by improvements across all business segments, particularly in orthopedics, sports medicine, and advanced wound management.

Key Highlights

- Revenue Growth: Smith & Nephew's underlying revenue growth for the first half of 2025 was 5.0%, with reported growth of 4.7% after adjusting for a 30 basis points FX headwind. This growth was supported by all regions and business units, with orthopedics and advanced wound management contributing significantly to the performance.
- Operating Profit: Operating profit increased by 30.6% to $429 million, driven by a 100 basis points expansion in the trading profit margin to 17.7%. This was achieved through revenue leverage and accelerated operational savings.
- Free Cash Flow: Free cash flow surged to $244 million, up from $39 million in the first half of 2024, reflecting strong cash generation and favorable working capital movements.
- Share Buyback: The company announced a $500 million share buyback in the second half of 2025, reflecting its strong cash generation and balance sheet position.

Business Unit Performance

- Orthopedics: Underlying revenue growth in orthopedics accelerated to 5.0% in the second quarter, with both Global and US Reconstruction sequentially improving from the first quarter.
- Sports Medicine & ENT: Revenue growth in this segment was up 5.7%, with reported growth of 6.8% excluding China.
- Advanced Wound Management: Underlying revenue growth was 10.2%, with reported growth of 11.4%.

Outlook

Smith & Nephew expects underlying revenue growth to be around 5.0% for the full year 2025, with trading profit margin expanding to between 19.0% and 20.0%. The company's outlook remains unchanged despite the expected net impact of $15 to $20 million from tariffs in 2025.

Conclusion

Smith & Nephew's strong performance in the first half of 2025 underscores its resilience and growth potential. The company's ability to drive revenue growth and profitability across all business units, coupled with its cash generation and balance sheet strength, positions it well for future growth. Investors and financial professionals should closely monitor the company's progress as it continues to execute on its transformation strategy.

References

[1] https://www.smith-nephew.com/en/news/2025/08/05/smithnephew-second-quarter-and-first-half-2025-results