By Simone Lobo Dec 8 (Reuters) – British medical products maker Smith & Nephew unveiled an ambitious new strategy on Monday targeting faster sales growth and more than $1 billion in free cash flow by 2028 as it looks to build on the success of its turnaround plan. The group completed a three-year turnaround plan […]
Health
Smith & Nephew sets ambitious targets after turnaround success
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By Simone Lobo
Dec 8 (Reuters) – British medical products maker Smith & Nephew unveiled an ambitious new strategy on Monday targeting faster sales growth and more than $1 billion in free cash flow by 2028 as it looks to build on the success of its turnaround plan.
The group completed a three-year turnaround plan aimed at fixing its largest orthopaedics division, cutting costs and boosting growth at its wound management and sports medicine businesses after surging inflation and supply chain challenges weighed on its margins.
The company, which makes orthopaedic implants, wound dressings and other surgical aids, plans to further simplify its portfolio, invest in higher-growth areas such as sports medicine and reduce inventory by around $500 million under the new strategy.
“This is a balanced plan that’s ambitious, yet it’s achievable and that positions us to actually accelerate growth and deliver superior financial outcomes,” CEO Deepak Nath told Reuters.
Its shares rose 1.9% by 1248 GMT.
AMBITIOUS GROWTH TARGETS FOR NEXT THREE YEARS
Smith & Nephew is targeting a 6%-7% compounded annual growth rate in underlying revenue by 2028. It maintained its underlying revenue growth outlook of around 5% for 2025 and expects around 6% in 2026.
“Given the significant step up from historical performance required to achieve this target, we remain nervous until the company can demonstrate reliably that it can generate this growth,” said RBC Capital Markets analyst Jack Reynolds-Clark.
Smith & Nephew said innovation was a key driver for its targets as roughly half of its growth this year came from new products launched in the last five years.
It expects to invest around 5% of its revenue in research and development.
Smith & Nephew, like other businesses across the board, is also facing rising costs and higher U.S. import tariffs.
The group, which manufactures in the UK, Switzerland, Costa Rica, Malaysia and China, has been shifting volume and raw materials flow to try to offset tariff costs.
Nath said he welcomed a U.S.-UK trade deal on British pharmaceutical products and medical technology but added that the UK accounted for only a small part of the firm’s tariff exposure, with the group heavily exposed to high rates on U.S. imports from Costa Rica, Malaysia and China.
(Reporting by Simone Lobo in Bengaluru; Writing by Yadarisa Shabong; Editing by Kevin Liffey)