4th Aug 2026 10:13
(Alliance News) - Smith & Nephew PLC on Tuesday lowered full-year sales guidance after a soft second quarter which was hit by weaker demand for hip and knee implants.
The Watford, England-based medical devices maker now expects full-year revenue growth of 4% from the USD6.16 billion posted in 2025, its guidance lowered from "around" 6% growth before.
Smith & Nephew left its guidance for trading profit, free cash flow and adjusted return on invested capital unchanged.
In response, shares in Smith & Nephew fell 6.6% to 1,118.00 pence each in London, the worst performing stock in the FTSE 100 index, which itself was up 0.4%.
Revenue rose 2.8% in the second quarter to USD1.60 billion from USD1.55 billion, or by 1.6% on an underlying basis. Underlying growth was below 3.7% company-compiled market consensus.
This took revenue to USD3.10 billion for the first six months of 2026, up 4.6% from USD2.96 billion a year ago.
Smith & Nephew expects second-half revenue growth to be in the range of 5.0% to 5.5%, a step-up on the first half.
Operating profit rose 4.3% to USD448 million in the first half of 2026 from USD429 million the year prior, with earnings per share of 35.6 US cents, up 6.2% from 33.5c.
The company raised its interim dividend by 4.0% to 15.6 US cents from 15.0 cents.
Smith & Nephew said second-quarter performance was driven by continued strength in Sports Medicine offset by softness in US Orthopaedics and Advanced Wound Bioactives.
Chief Executive Deepak Nath said: "The group navigated some challenges in the second-quarter. Sports Medicine continued to perform strongly, but Orthopaedics was impacted by temporary headwinds in US Hip Implants and ongoing challenges in US Knee Implants ahead of new product introductions."
The CEO added: "Orthopaedics is not where we want it to be, but we expect growth to accelerate as we fill portfolio gaps, starting later this year and continuing into 2027."
Nath said increased efficiency savings enabled the company to maintain profit guidance despite the lower sales outlook.
Smith & Nephew said USD130 million of efficiency savings were realised in the first half, with a further USD70 million of savings forecast in the second half.
The savings helped strengthen trading profit margin by 60 basis points to 18.3% in the first half of 2026 from 17.7% a year ago.
For the full-year, S&N expects the net year-on-year impact of US trade tariffs to be broadly neutral to trading profit and the headwind from skin substitutes to be towards the upper end of the previously guided USD20 to USD40 million range.
By Jeremy Cutler, Alliance News reporter
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