Smith & Nephew Plc Half-year Report Announcement

Smith+Nephew Second Quarter and First Half 2022 Results

28 July 2022

Smith+Nephew (LSE:SN, NYSE:SNN), the global medical technology company, reports results for the second quarter and first half ended 2 July 2022:

Q2 Trading Highlights ^1,2

· Q2 revenue of $1,293 million (2021: $1,335 million), up 1.2% on an underlying basis (down 3.1% on a reported basis including 430bps FX headwind) with one fewer trading day than equivalent prior-year period

· Orthopaedics revenue declined -1.1% (-4.9% reported) reflecting execution and supply chain challenges, and China VBP

· Sports Medicine & ENT up 1.9% (-2.4% reported) with growth significantly impacted by the COVID-related lockdown in China

· Advanced Wound Management up 3.8% (-1.3% reported) with all regions and segments contributing

H1 Highlights ^1,2

· H1 revenue of $2,600 million (2021: $2,599 million), up 3.5% on an underlying basis (flat on a reported basis including 350bps FX headwind)

· Operating profit of $242 million (2021: $239 million)

· Trading profit of $440 million (2021: $459 million). Trading profit margin of 16.9% (2021: 17.6%) reflects higher input inflation

· $125 million of 2022 share buyback programme completed to date

· Interim dividend of 14.4¢, in-line with prior year

2022 Full Year Outlook^1,2

· Unchanged full-year underlying revenue growth guidance of 4.0% to 5.0%

· Trading profit margin now expected to be around 17.5%, reflecting prolonged impact of the inflationary environment and continued external supply challenges

Strategic Highlights ^1,2

· Comprehensive action plan underway to drive excellence in execution supporting Strategy for Growth, focused on:

Fixing Orthopaedics

Improving productivity

Accelerating growth in Advanced Wound Management and
Sports Medicine & ENT

· Continued cadence of new product launches and investment in R&D pipeline

Deepak Nath, Chief Executive Officer, said:

“After only a few months at Smith+Nephew it is clear to me that we have many more opportunities than challenges. Our fundamental competitive position is strong, and we have a clear right to win in all three franchises through product differentiation and proprietary platform technologies. And, importantly, delivery is well on-track in two of the three franchises, providing 60% of our revenue.

“Orthopaedics continues to be held back by execution and supply chain challenges. In the last three months, I have reviewed the business and, together with the team, we have developed a comprehensive plan to drive better execution at pace.

“Our focus is on delivering our transformational strategy. We will drive operational benefits in Orthopaedics, as soon as this year, and build on our strong positions in Advanced Wound Management and Sports Medicine & ENT. I am confident in our ability to transform Smith+Nephew into a structurally higher-growth business delivering greater value for all our stakeholders.”