Smith & Nephew (SN) CMD 2025 summary

Strategic vision and future growth

• Launched the RISE strategy, targeting 6-7% organic revenue CAGR and 9-10% trading profit CAGR through 2028, focusing on innovation, disciplined execution, and margin expansion across all business units.

• Aims to reach 20 million patients by 2028, up from 15 million, by driving adoption of differentiated products and expanding into new indications, settings, and geographies.

• Key growth engines include REGENETEN, Agili-C, PICO, ALLEVYN COMPLETE CARE, and the CORI robotic platform, with over 75 product launches in the last five years and a robust pipeline for the next 18 months.

• Strategic capital allocation will prioritize high-growth, high-return segments, especially in Sports and Wound, with disciplined M&A and strong cash generation enabling shareholder returns.

• Operational excellence and digital transformation, including AI and a single ERP platform, will drive productivity, asset efficiency, and customer engagement.

Financial guidance and performance

• 2028 targets include 6-7% underlying revenue CAGR, 9-10% trading profit CAGR, over $1 billion in free cash flow, and 12-13% post-tax ROIC, all significantly above historical averages.

• Achieved a 14-fold increase in free cash flow since 2022, reaching $800 million in 2025, with a target of $1 billion by 2028.

• Trading margin expanded by over 200 bps since 2022, with ROIC improving from 6.6% to 9.5% and a goal of 12%-13% by 2028.

• Operational savings of $325-$375 million targeted by 2027, with $150 million expected in 2026, supporting profit growth ahead of sales despite headwinds from tariffs, inventory revaluation, and reimbursement changes.

• Orthopaedics margin expected to expand by 300-400 bps by 2028, exceeding 20% by 2030, with ROIC in Ortho targeted to double.

Business unit strategies

• Sports Medicine: Aims for high single-digit growth and market leadership, leveraging REGENETEN, Agili-C, and TESSA, with continued investment in R&D and commercial capacity.

• ENT: Focuses on expanding CIT and TULA as standards of care, launching new products like Phoenix and LYNX, and maintaining above-market growth with high margins.

• Wound Management: Targets high single-digit growth and market leadership by focusing on high-growth segments, launching ALLEVYN Complete Care and next-gen LEAF, and expanding in emerging markets.

• Orthopaedics: Strengthened commercial engine, streamlined portfolio, and new launches (LEGION MS, LANDMARK Knee, CORI XT) to drive growth, margin expansion, and asset efficiency, with a focus on ASC channel and global simplification.

• Portfolio rationalisation will simplify offerings, reduce inventory by around $500 million, and lower capital requirements, with a $200 million non-cash inventory provision in 2025.