Smith & Nephew (SN) H1 2024 earnings summary

Executive summary

• Q2 2024 underlying revenue grew 5.6% to $1,441m, with all business units accelerating and strong momentum in Sports Medicine, Advanced Wound Management, and Orthopaedics.

• Trading margin expanded to 16.7% in H1, with trading profit up 12.8% to $471m, reflecting productivity gains from the 12-Point Plan.

• Cash conversion improved to 60% in H1 2024 (H1 2023: 26%), with free cash flow turning positive at $39m.

• 85% of group sales are in segments performing strongly, supported by strategic transformation since 2022.

• Interim dividend maintained at 14.4¢ per share.

Financial highlights

• H1 2024 revenue reached $2,827m, up 4.3% underlying and 3.4% reported, with a 90–100bps FX headwind.

• Gross profit was $1.98bn, gross margin 70.1% (up 30bps), and trading profit $471m.

• Adjusted EPS grew 7.7% to 37.6¢; basic EPS 24.5¢; interim dividend held at 14.4¢ per share.

• Net debt at $3,086m, leverage ratio at 2.2x adjusted EBITDA.

• Free cash flow improved to $39m (H1 2023: -$82m).

Outlook and guidance

• Full-year 2024 guidance reaffirmed: underlying revenue growth of 5.0–6.0% and trading margin of at least 18.0%.

• H2 margin expansion expected from operating leverage and productivity; China VBP pricing remains a headwind.

• FY 2025 trading margin targeted at least 20.0%, with cost savings offsetting VBP impact.

• Trading cash conversion targeted at ~85% for the full year.