Smith+Nephew Shares Surge on Robust H1 Results, $500M Buyback Announced

Smith+Nephew (LON: SN.) saw its shares climb in early trading on Tuesday following the release of its strong first-half 2025 results and the announcement of a new $500 million share buyback program.

The global medical technology company reported gains in revenue, profitability, and cash flow, exceeding market expectations and reinforcing its full-year guidance.

The stock is currently trading around 1,287p, rising more than 11% from its previous close. Prior to Tuesday's move, the stock had rallied over 30% this year.

For the first half of 2025, Smith+Nephew reported revenue of $2.961 billion, a 4.7% increase compared to $2.827 billion in the same period last year. Underlying revenue growth, which adjusts for currency fluctuations and trading day variations, was even stronger at 5.0%.

Operating profit jumped 30.6% to $429 million, resulting in an improved operating profit margin of 14.5%, up from 11.6% in H1 2024. Earnings per share (EPS) also saw a substantial increase of 36.6%, reaching 33.5 cents.

The company's strong cash generation was a standout feature of the results. Cash generated from operations surged by 54.3% to $568 million, while free cash flow experienced an impressive 528.3% increase to $244 million, driven by favorable working capital movements and lower restructuring charges.

Trading profit rose by 11.2% to $523 million, with the trading profit margin expanding to 17.7% from 16.7% in the prior year, reflecting the benefits of revenue leverage and operational savings.

In the second quarter of 2025, underlying revenue growth accelerated to 6.7%, with reported growth reaching 7.8%, boosted by a 110bps FX tailwind.

All regions and business units demonstrated growth ahead of the first quarter. Notably, Orthopaedics saw underlying revenue growth of 5.0%, with improvements in both Global and US Reconstruction. Sports Medicine & ENT grew by 5.7% (10.2% excluding China), while Advanced Wound Management experienced a robust 10.2% increase, driven by a rebound in Advanced Wound Bioactives.

Reflecting its strong financial position, Smith+Nephew announced a 4.2% increase in its interim dividend to 15.0 cents per share.

Furthermore, the company unveiled a new $500 million share buyback program to be executed in the second half of 2025, underscoring its confidence in its ability to generate cash while maintaining leverage and pursuing growth opportunities.

Smith+Nephew reaffirmed its full-year 2025 guidance, projecting underlying revenue growth of around 5.0% and a trading profit margin expansion to between 19.0% and 20.0%. This outlook incorporates an expected net impact of $15 to $20 million from tariffs, based on announced measures and mitigations.

CEO Deepak Nath highlighted the role of recent product launches in driving growth across all business units. “Recent product launches are driving growth across all business units, with US Hip Implants becoming another example of the innovation driven growth that is central to our strategy,” he stated.