Smith & Nephew (SN) Q3 2024 TU earnings summary

Executive summary

• Q3 2024 underlying revenue grew 4.0%, reaching $1,412 million, with established markets—especially the US—showing strong performance, while China was a significant headwind due to VBP and lower demand, reducing overall growth by 190bps.

• The 12-Point Plan continues to drive operational improvements, product availability, and commercial execution, particularly in Orthopaedics and Sports Medicine, embedding cultural change and delivering financial gains.

• Innovation and new product launches, such as CATALYSTEM, GRAFIX PLUS, and TOTAL ANKLE Patient-Matched Guides, contributed to growth, with nearly half of 2023 revenue growth from products launched in the last five years.

• Advanced Wound Management posted its strongest quarter of the year, with all segments performing well.

Financial highlights

• Q3 revenue was $1,412 million, up 4.0% year-over-year, with US revenue up 4.0%, Other Established Markets up 6.8%, and Emerging Markets flat at -0.1%; no foreign exchange impact.

• Orthopaedics revenue up 2.3%, with US Knees +0.7% and Hips +3.2%, but weakness in China.

• Sports Medicine & ENT revenue up 3.9%, with AET up 15.0% and ENT down 6.8% due to a tough prior-year comp; ex-China, Sports Medicine Joint Repair grew 9.4%.

• Advanced Wound Management revenue up 6.5%, led by double-digit growth in Devices and Bioactives.

Outlook and guidance

• Full-year 2024 underlying revenue growth expected at 4.5%, below previous 5-6% guidance, due to China headwinds.

• Trading margin expansion for 2024 guided up to 50 basis points; 2025 margin now expected at 19-20% due to China headwinds.

• Revenue growth for 2025 expected around 5%, with margin accretion anticipated in 2026 and 2027.

• Cash conversion target remains at 85%.

• Q4 expected to accelerate due to Recon improvement (ex-China), stronger T&E, and two extra trading days.