Smith & Nephew (SN) Q2 2026 earnings summary

Executive summary

• Underlying revenue growth for Q2 2026 was 1.6%, below expectations, with strong Sports Medicine and ENT offset by softness in US Orthopaedics and Advanced Wound Bioactives.

• H1 2026 trading profit reached $566 million, up 8.1% year-over-year, supported by efficiency savings and tariff refunds.

• The group remains focused on margin progress, expecting further improvement in US Orthopaedics and normalization in Bioactives through the year.

• Revenue outlook for FY 2026 reduced to around 4%, but profit, free cash flow, and ROIC guidance are maintained, supported by additional $50 million in efficiency savings identified for 2026.

Financial highlights

• Q2 2026 revenue was $1,597 million (+1.6% underlying, +2.8% reported), with a 120 bps FX tailwind.

• H1 2026 revenue was $3,097 million (+4.6% reported, +2.3% underlying); trading profit margin improved to 18.3%.

• Gross margin rose to 71.1%, up 60 bps year-over-year, driven by efficiency savings.

• Adjusted EPSA for H1 2026 was 47.7¢, up 11.0% year-over-year; interim dividend increased 4% to 15.6¢ per share.

• H1 free cash flow was $231 million, impacted by higher capex and working capital.

Outlook and guidance

• Full-year underlying revenue growth outlook reduced to around 4%, with H2 2026 growth expected at 5.0–5.5%.

• Trading profit guidance maintained at around 8% growth (excluding M&A), or ~$1.3 billion including Integrity acquisition.

• Free cash flow expected at ~$800 million for 2026; ROIC above 10%.

• Additional $50 million in efficiency savings identified for 2026, raising total to $200 million.