Smith & Nephew plc (LON:SN, NYSE:SNN), the global medical technology business, has reported results for the fourth quarter and full year ended 31 December 2024:
| 31 Dec | 31 Dec | Reported | Underlying | |||||
| 2024 | 2023 | growth | growth | |||||
| $m | $m | % | % | |||||
| Fourth Quarter Results1,2 | ||||||||
| Revenue | 1,571 | 1,458 | 7.8 | 8.3 | ||||
| Full Year Results1,2 | ||||||||
| Revenue | 5,810 | 5,549 | 4.7 | 5.3 | ||||
| Operating profit | 657 | 425 | 54.6 | |||||
| Operating profit margin (%) | 11.3 | 7.7 | ||||||
| EPS (cents) | 47.2 | 30.2 | 56.3 | |||||
| Cash generated from operations | 1,245 | 829 | 50.2 | |||||
| Trading profit | 1,049 | 970 | 8.2 | |||||
| Trading profit margin (%) | 18.1 | 17.5 | ||||||
| EPSA (cents) | 84.3 | 82.8 | 1.7 | |||||
| Free cash flow | 551 | 129 | 327.1 |
Deepak Nath, Chief Executive Officer, said:
“Smith+Nephew’s transformation remains on track with the 12-Point Plan increasingly delivering better financial performance. Revenue growth is consistently above historical levels following operational and commercial improvements. Changes to our organisational structure are driving increased accountability at the Business Unit level. Operating leverage and productivity improvements are supporting margin expansion despite significant sector-wide headwinds. Working capital discipline and asset utilisation have driven strong cash flow generation and better returns.
“We finished the year strongly and US Reconstruction was again sequentially better. Our innovation continued to deliver, with more than 60% of revenue growth in 2024 coming from products launched in the last five years. We have launched nearly 50 new products over the last three years and have an exciting pipeline for 2025.
“There is much more to be done, but we have made solid progress fixing the foundations and expect a step-up in returns in 2025, including significant margin expansion. We are confident that this will be the year when transformation starts to unlock substantial value for our shareholders.”
Full Year Highlights1,2
· 12-Point Plan actions driving strong revenue growth and second year of trading margin expansion, offsetting headwinds from inflation and China
· Around 410bps of incremental costs savings and a near 9% net reduction in total workforce delivered across 2023 and 2024
· 2024 revenue of $5,810 million (2023: $5,549 million), with underlying revenue growth of 5.3%. Reported growth of 4.7% was after -60bps FX headwind
· Recent product launches were a major contributor to higher growth, with many at early stages of roll-out, and exciting pipeline to come
· Trading profit grew 8.2% to $1,049 million (2023: $970 million) with 18.1% trading profit margin, up 60bps (2023: 17.5%). Reported operating profit improved to $657 million (2023: $425 million)
· Significant improvements in cash generated from operations at $1,245 million (2023: $829 million), trading cash flow at $999 million (2023: $635 million) and trading cash conversion, up to 95% (2023: 65%). Free cash flow increased to $551 million (2023: $129 million)
· Adjusted Return on Invested Capital (ROIC) improved to 7.4% (2023: 5.9%), with further progress expected in 2025
· Restructuring charges down significantly to $123 million (2023: $220 million)
· Increase in EPSA to 84.3¢ (2023: 82.8¢) and EPS to 47.2¢ (2023: 30.2¢)
· Full year dividend of 37.5¢ per share (2023: 37.5¢ per share)
Q4 Trading Highlights1,2
· Q4 revenue of $1,571 million (2023: $1,458 million), with underlying revenue growth of 8.3%, which includes the benefit of two extra trading days. Reported growth of 7.8% was after -50bps FX headwind
· Strong finish to year in all regions except China
· US Reconstruction performance continued to improve. Underlying and reported revenue growth was 5.4% for Knee Implants and 7.6% for Hip Implants
· China headwind sustained across Sports Medicine Joint Repair and Reconstruction, as expected, reducing the Group underlying revenue growth rate by -280bps
Outlook1,2
· For 2025 we are targeting another year of strong revenue growth and a significant step-up in trading profit margin
· 2025 underlying revenue growth expected to be around 5% (reported growth of around 4.8%); first quarter underlying revenue growth expected to be in the range of 1% to 2% primarily due to continued China headwinds and one less trading day, with acceleration thereafter
· Full year trading profit margin expected in the range of 19.0% to 20.0%; with margin stronger in the second half than the first as impact of China headwinds reduce and operational savings are delivered
· Continued momentum and efficiency gains expected to drive further margin expansion beyond 2025
Analyst conference call
An analyst conference call to discuss Smith+Nephew’s fourth quarter and full year results will be held 8.30am GMT / 3.30am EST on 25 February 2025, details of which can be found on the Smith & Nephew website at https://www.smith-nephew.com/en/about-us/investors.
