Q3 2025 Smith & Nephew PLC Trading Statement Call Transcript

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

Question: Jack Reynolds-Clark - RBC Capital Markets Inc - Analyst : Hi there, good morning. Thank you for taking the questions. I have three , please. The first is on revenue guide. So given kind of the -- I guess, the slowdown in Q3, do you think there's a risk that underlying growth for the full year comes in kind of slightly below that 5% mark you've guided to for the full year? And kind of what gives you confidence in the tick up through the remainder of the year? Then on margin guidance, you've talked before, I think about anchoring at the kind of the middle of the range of the 19% to 20% range. I guess does Q3 performance impact how you're thinking about that now? Kind of where are you and where do you suggest we anchor within that? And then regarding 2026 and the impact of the LCD. Can you talk through the assumptions around kind of the bottom and top end of the 25 bps to 50 bps margin impact you've guided to? And kind of what the driver will be where you come in that range? 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. NOVEMBER 06, 2025 / 8:30AM, SN.L - Q3 2025 Smith & Nephew PLC Trading Statement Call

Question: Jack Reynolds-Clark - RBC Capital Markets Inc - Analyst : That's great. Thank you very much.

Question: Veronika Dubajova - Citi - Analyst : Hi guys. Good morning, and thank you for taking my questions. I will keep it two, please. My first one is just actually going back to Jack's question around the revenue guide. I think when you had previously talked about the shape of the year, you had always kind of cautioned us around the fourth quarter and how difficult the comparison base was and sort of -- I think the messaging from you as always, this is something that we should expect the fourth quarter to be weaker. Obviously, with where Q3 has progressed and your comments, Deepak, just right now and how you feel about the rest of the year. Just curious if you're thinking on that has changed and maybe what's driven that? Is it a phasing of revenues through Q3 and Q4? Just if you can talk through that, that would be super, super helpful. And the new SMEs, I hate to be the person to ask this question, but I have to, just -- obviously, we are still seeing a very, very wide gap between you and the market. I know you are continuing to work through the portfolio rationalization, but I was hoping maybe you can give us a little bit of the financial impact of what the portfolio rationalization meant from a sort of actual sales basis points of growth? And then how you're thinking about sort of when we might see this gap narrow somewhat from where we are at the moment? And is this really sort of a 2026 event? Is this a Q4 2026 event or 2027? Just your updated thinking on that. Thank you guys.

Question: Veronika Dubajova - Citi - Analyst : That's great. Thanks so much guys. Really appreciate it.

Question: Hassan Al-Wakeel - Barclays Services Corp - Analyst : Thank you for taking my questions. A couple, please. Firstly, as you look into 2026, what are the key pulls and pushes on the margin? And to what extent there's continued softness in knees next year, hold back your margin expansion potential in this business and overall versus what you might have thought at the start of this year? And then secondly, if you could please elaborate on the hips weakness outside of the US, how much of this was down to China? And is that market or share or both? And how are you thinking about the future of this business? Thank you.

Question: Hassan Al-Wakeel - Barclays Services Corp - Analyst : Very helpful. And the future of the China business?

Question: Hassan Al-Wakeel - Barclays Services Corp - Analyst : Perfect. Thank you.

Question: Graham Doyle - UBS AG - Analyst : Thanks a lot guys. And just two questions for me on margins. Firstly, just, John, in terms of the guide for this year, we've only got two months left, and it's a pretty wide margin range. So can you maybe remind us why kind of November, December could be quite broad in terms of the impact of the business and why you haven't got better visibility on that at this point? And then just on next year. So obviously, the numbers could be wrong. I look at ENT, AET, the wound you described and tariff, I guess like 150 bps of margin headwinds next year. So is it realistic to assume a modest margin uplift against that? Or do you think you can do something a bit more similar to this year? Thank you.

Question: Graham Doyle - UBS AG - Analyst : Okay. Thanks a lot.

Question: Kane Slutzkin - Deutsche Bank AG - Analyst : Sorry, I think most have been answered. But just a quick one on the US knees. It sort of picked up yesterday from one of your competitors talking about a sort of soft or a slowdown in the US revision market. I don't know if you had any comments on that. And just on the sort of US Recon piece, I mean, you're sort of saying you're quite confident in the Q4 number. Just wondering, the comp is pretty tough, isn't it? And would it be right to say most -- a lot of that would be in the US sort of the higher-margin stuff in Q4 in terms of the comp?

Question: Kane Slutzkin - Deutsche Bank AG - Analyst : Okay. Thanks. And the sort of target for market growth, is that still the end of this year? You haven't changed that, have you?

Question: Kane Slutzkin - Deutsche Bank AG - Analyst : Okay. So I guess a bit of legwork maybe will be done by hips. And there's nothing really to call out there in terms of any potential sort of headwinds that could sort of derail the overall kind of US Recon piece? I'm -- just you talking about US Recon now?

Question: Kane Slutzkin - Deutsche Bank AG - Analyst : Okay, lovely. All right. Thanks, guys.

Question: David Adlington - JPMorgan Chase & Co - Analyst : Hey, guys. Maybe just on other Recon, where it was certainly a bit of a slowdown there. I think on CORI placements and mix. Maybe just give us some further color and your expectations for Q4 would be great. Thank you.

Question: David Adlington - JPMorgan Chase & Co - Analyst : That's great. Thank you.