Smith+Nephew’s profit jumps as transformation play pays off
Smith+Nephew reported revenue growth for 2024, as the company’s 12-Point Plan delivered improved financial performance, better margins, and stronger cash flow.
Fourth-quarter revenue rose 8.3 per cent year-on-year to $1.57bn (£1.24bn), bolstered by operational and commercial improvements.
New product launches played a significant role in driving growth, with over 60 per cent of revenue gains in 2024 attributed to innovations from the past five years.
Profitability also improved, with operating profit jumping 54.6 per cent to $657m (£520m) and trading profit up 8.2 per cent to $1.05bn (£829m).
The group’s trading profit margin reached 18.1 per cent, a 60-basis-point increase from the previous year.
The company said it expected a further rise in returns in 2025, with a targeted trading profit margin of up to 20 per cent.
Smith+Nephew’s cash generated from operations increased 50.2 per cent to $1.25bn (£990m).
Free cash flow surged to $551m (£435m) from $129m (£102m) the previous year.
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 per cent 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.”