Smith & Nephew cuts sales outlook after weak US trading

Smith & Nephew PLC (LSE:SN) shares tumbled 6.6% to 1,118.5p after the medical technology group cut its full-year revenue growth forecast after weakness in its US orthopaedics and wound care businesses in the second quarter.

The FTSE 100 now expects annual revenue growth of around 4%, down from its previous forecast of around 6%. Guidance was maintained for trading profit, free cash flow and return on invested capital, helped by an additional $50 million from operational efficiencies and improved tariffs.

Revenue rose 2.8% to $1.6 billion in the three months to June, though if currency benefits are excluded, underlying revenue growth was 1.6%, which the company said was lower than anticipated.

Strong demand for sports medicine products was offset by temporary headwinds in US hip implants, continued difficulties in US knee implants and softer-than-expected sales of the SANTYL wound care product.

First-half revenue increased 4.6% to $3.1 billion, or 2.3% on an underlying basis. Trading profit rose 8.1% to $566 million, while the trading margin improved to 18.3% from 17.7%. Adjusted earnings per share climbed 11% to 47.7 cents and operating profit increased 4.3% to $448 million.

Free cash flow fell 5.2% to $231 million, partly because of higher spending on a new UK wound care factory and IT upgrades.

Smith+Nephew expects revenue growth to accelerate to between 5% and 5.5% in the second half, supported by product launches and an extra trading day. A further $50 million of savings has been identified, taking the expected total for 2026 to around $200 million. The company continues to target trading profit grow...