Smith & Nephew's Q2 2025: Unpacking Contradictions in Tariffs, U.S. Knees, and Market Expectations

Tariff impact and mitigation, U.S. Knees performance and market share, market conditions and performance expectations, improvements in U.S. Knees and Hips, inventory reduction and cost savings are the key contradictions discussed in Smith & Nephew's latest 2025Q2 earnings call.



Revenue and Profit Growth:
- Smith & Nephew reported revenue of $1.6 billion for Q2 2025, with 6.7% underlying growth, marking sequential improvement across all regions and business units.
- The growth was driven by strong momentum in Sports Medicine, Advanced Wound Management, and improved performance in Orthopaedics, particularly in Recon and Robotics.

Orthopaedics Performance:
- Orthopaedics grew 5.5% underlying, with a significant contribution from the Recon and Robotics segment, which improved 4% in the U.S.
- This improvement was attributed to increased product availability, commercial execution, and a focus on high-volume accounts.

Inventory and Margin Expansion:
- Smith & Nephew saw a 70% increase in trading cash flow, with a significant reduction in inventory days, contributing to a 100 basis point expansion in trading margin.
- This margin expansion was driven by operational efficiencies, cost savings, and improved inventory management.

Wound Management Recovery:
- The Advanced Wound Management business grew 10.2%, rebounding from recent challenges, driven by a 2.6% increase in Advanced Wound Care and a strong performance in Bioactives.
- The rebound was attributed to the recovery of SANTYL and strong growth in skin substitutes.

Operational Improvements and Share Buyback:
- Smith & Nephew delivered operating savings of $50 million in the first half, with plans for a $500 million share buyback in the second half of 2025.
- These operational improvements and the buyback are supported by strong cash flow and inventory management, reflecting the company's efficiency in cost savings.