Q1 2025 Smith & Nephew PLC Trading Statement Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Richard Felton - Goldman Sachs - Analyst : Good morning. Thanks very much for taking my questions. 2, please, the first one is on the phasing of growth through the year. On your 4 year call you shared some reasonably detailed thoughts, on how to think about phasing. Has anything changed in your view, as you move through Q1? And you maybe remind us of how you see top line growth progressing in Q2 and beyond. That's the first one. My second question is a product question on REGENETEN. I mean, could you maybe give us a little bit more color on what is driving growth within that? Products family, how big it is in your portfolio today, and then following the 510 clearance, for the extra articular ligament repair at the end of last year, how much traction are you seeing there, and how could that how big could that opportunity, be over time? Thank you.

Question: Richard Felton - Goldman Sachs - Analyst : Great thank you very much.

Question: Julien Dormois - Jefferies - Analyst : Hi, good morning, Deepak. Good morning, John. Thanks for taking my question. I have to, the first one relates to the performance of the recon business outside of the US, so, it would be interesting if you could shed more light on what's going on outside of the US. So obviously your performance in the US is on, is improving by the day, but maybe at the expense of what's happening outside of the US. So maybe if you could shed more light on what's happening there, that would be helpful. And the second question relates to more of housekeeping question in light of the market swings in ethics. Could you just remind us of what your expectations would be at this stage for the margin impact on your guide or the ethics impact, sorry, on your margins this year? I think you have a hedging policy in place that probably delays some of the potential benefits from a weaker dollar, but any color that would be helpful. Thank you.

Question: Julien Dormois - Jefferies - Analyst : Super helpful thank you. Guys.

Question: Jack Reynolds-Clark - RBC - Analyst : Hi there, thank you for taking the questions. To me also, hey, so starting with revenue guide. So, obviously Q1's stronger than expected. I'm just wondering kind of how is Q2 shaping up so far, John, you talked about a step up in Q2. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 30, 2025 / 7:30AM, SN.L - Q1 2025 Smith & Nephew PLC Trading Statement Call Are you seeing that kind of come through? And then should be thinking, should we be thinking about potential upside that kind of around 5%, underlying revenue guide, given that you're not expecting things really to slow down, through the remainder of the year. And then the second question was just on tariffs. Could you talk a little bit more about the offsets you're implementing? I give a bit of detail around the operational offsets and kind of what these comprise and how much you might be able to implement price increases.

Question: Jack Reynolds-Clark - RBC - Analyst : That's great, thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 30, 2025 / 7:30AM, SN.L - Q1 2025 Smith & Nephew PLC Trading Statement Call

Question: Lisa Bedell Clive - Bernstein - Analyst : Hi, could you just give us a little bit more guidance on the margin progression around the Malaysia ramp up and then specifically the I think you were going to be closing down 4 plants for those all in Europe just trying to understand in terms of the progression of your COGS this year and also potentially in the next year how to think about that. And then second, and then just second on tariffs, thank you for the guidance on that's very helpful. Between the US and Europe, I mean, it seems, US, China, you're pretty well positioned. US and Europe, my understanding is there's a bit more back and forth. I think if I'm not, if I think of, I'm Right, that there's a fair amount of sports medicine that goes from the US into Europe. Just thinking through, in a worst case scenario where things ramp up with Europe, how well positioned you are to mitigate that.

Question: Lisa Bedell Clive - Bernstein - Analyst : Super thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 30, 2025 / 7:30AM, SN.L - Q1 2025 Smith & Nephew PLC Trading Statement Call

Question: Hassan Al-Wakeel - Barclays - Analyst : Hi, good morning. Thank you for taking my questions. I have 3 please. Firstly, on margin, the pack at the full year, you pointed to tightening the range, at the Q1 stage. Appreciate things are changing very rapidly, but given the $15million to $20 million impact from tariffs or around 30 basis points, is the lower end now more realistic? Secondly, on growth, which was stronger than. Your expectation the full year, can you talk about any updated views on hospital utilization for the rest of the year, and also any competitive dynamics that you're observing given some launches in hips, at some of your peers. And then finally, can you talk about the strength in core replacements in the quarter and what is driving this regionally? Also, given the restatement of consumable revenue, can you provide the growth in consumable revenue in the quarter that has now moved to recon and whether this was meaningfully different to underlying growth in the recon business prior to the restatement? Thank you.

Question: Kane Slutzkin - Deutsche Bank - Analyst : Morning, guys. Can you hear me?

Question: Kane Slutzkin - Deutsche Bank - Analyst : Just a quick one, John, just on the US recon, I seem to recall you saying at the sort of round table in February that the US needs needed to be sort of 2% in Q1 and sort of the exit at 3% in order to kind of really be on track to return to market growth. Could you just confirm that was the case and on the adjusted measures you've given, for the trading days, would be fair to say you're there and thereabouts. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 30, 2025 / 7:30AM, SN.L - Q1 2025 Smith & Nephew PLC Trading Statement Call

Question: Kane Slutzkin - Deutsche Bank - Analyst : Great, thanks. And just, John, sorry I just missed something you mentioned earlier where you were talking about sort of the sort of scenarios that play out to get you to the lower and the upper end of that 19% to 20% range. Appreciate Deepak gave a sort of a view that you're probably going to come somewhere in the middle. But just, could you just relay those scenarios? Sorry, I completely missed it. You were sort of suggesting something around what gets you to 19 versus 20.

Question: Hassan Al-Wakeel - Barclays - Analyst : Okay. All right. Thanks Guys.

Question: David Adlington - J P Morgan Cazenove - Analyst : Hey guys, thanks for the. Question. So, firstly, just on China, maybe you could just remind us of where China peaked as a percentage of sales and where you've come down to, as of this quarter in terms of percentage of sales and following on from that, does it still make commercial sense to maintain a presence in China? And then secondly, just to fully clarify, John, because I'm, I might be being a bit, stupid this morning, but when you talk about the range and the top of the end of guidance that you just pointed to. Are you talking about 15 to 20 as in the impact of the tariffs or the 19% to 20% margin range that you've given them, thanks. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 30, 2025 / 7:30AM, SN.L - Q1 2025 Smith & Nephew PLC Trading Statement Call

Question: David Adlington - J P Morgan Cazenove - Analyst : Yes, right. Understood perfect.

Question: David Adlington - J P Morgan Cazenove - Analyst : And just to clarify, are you profitable in China currently, in any of the Businesses or?

Question: David Adlington - J P Morgan Cazenove - Analyst : That's great. Thank you.

Question: Veronika Dubajova - Citi - Analyst : Hi guys, good morning and thanks for taking my questions. Both have been, asked and answered already, but maybe just 21, I guess, just looking into 2026 and the tariff impact as it annualizes out on the worst case scenario. Is there any more mitigation that you can do, John, as you think about 2026, or should we be taking the number you've given us for this year and doubling it for next year as far as tariffs are concerned. That's my first question. And then my second question is, no one's asked about what would we spent all the time on Ortho, but just the strength and, devices if you can talk to what's driving it and how sustainable you feel that is through the rest of the year. Thank you guys.

Question: Veronika Dubajova - Citi - Analyst : Great thank you guys.

Question: Dylan Van Haaften - Stifel - Analyst : Hey guys, good morning. So just the first one, just on, the current working capital, and with ortho because by my understanding you guys have at least a couple of years of working capital theoretically in Ortho. Does that help you offset some of the tariff impacts? And is that sort of embedded into this number?

Question: Dylan Van Haaften - Stifel - Analyst : Thanks and just one follow up, just thinking about sort of, progression into the year, are you guys at all concerned about any consumer dynamics and could you maybe just remind us, what the rough ortho private payer and co-pay exposure is and if you are at all concerned, any change of behaviour there could, change growth dynamics for the market. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 30, 2025 / 7:30AM, SN.L - Q1 2025 Smith & Nephew PLC Trading Statement Call

Question: Dylan Van Haaften - Stifel - Analyst : Awesome thanks for taking my question.

Question: Robert Davies - Morgan Stanley - Analyst : Morning, yes, thanks for taking my questions had 3. The first one was just, in terms of the China phasing that you gave this down 50, which is progressing towards 10 over the years, just be curious in terms of the visibility, it gives us a bit more color perhaps in terms of where that comes from, what's the underlying assumption in that trajectory over the year. The second one was just on, I know you mentioned some sort of manufacturing or factory closures, in different places. I just wondered if there's anything more to do on that, and that sort of ties in with the third question, which is just where we are big picture on the 12 point plan. What are the key elements of the 12 point plan you still have got to achieve, and are there any additional opportunities that you've come across over the last year, relative to what you started out with? Thank you.

Question: Robert Davies - Morgan Stanley - Analyst : That's very helpful. Thank you both.