Smith & Nephew PLC announced that it has lifted its 2025 free‑cash‑flow forecast to $800 million, up from the $750 million guidance issued earlier in the year. The company also unveiled new medium‑term targets through 2028, including a 6‑7% compound annual growth rate (CAGR) in underlying revenue, a 9‑10% CAGR in trading profit, and a free‑cash‑flow of more than $1 billion by 2028. These figures were presented during the firm’s Capital Markets Day, where management outlined the RISE strategy and its expected impact on the company’s financial trajectory.
The upward revision reflects stronger operating performance in the first three quarters of 2025. Smith & Nephew’s 2024 trading profit reached $1,049 million, with a margin of 18.1%, while the 2025 free‑cash‑flow forecast now exceeds the $551 million generated in 2024. Management cited disciplined cost control, inventory optimisation—aiming to reduce inventory by $500 million—and a portfolio rationalisation that has already begun to lift margins. These initiatives have allowed the company to maintain profitability even as it invests in high‑return growth areas.
Segment‑level drivers underpin the new targets. Sports Medicine, Advanced Wound Management and ENT are expected to deliver above‑market growth through new product launches and expanded market share, while Orthopaedics is projected to grow at a more mature pace. The RISE strategy focuses on innovation, operational efficiency and portfolio rationalisation, with a particular emphasis on reducing non‑cash inventory provisions of $200 million in 2025. These actions are designed to free cash flow that can be reinvested in research and development and to support shareholder returns.
Chief Executive Officer Deepak Nath highlighted the differentiated growth plan, noting that each business unit will contribute uniquely to value creation. He said the company’s free‑cash‑flow will enable ongoing investment in innovation and strategic opportunities, and that the RISE framework builds on the success of the 12‑Point Plan to accelerate financial performance. Nath’s comments signal strong confidence in the company’s ability to execute the strategy and deliver on the new targets.
Analysts had previously expected a 5.2% revenue CAGR through 2028; the company’s guidance exceeds that consensus, signalling a more aggressive growth outlook. The announcement was well received by investors, who viewed the upgraded free‑cash‑flow forecast and the ambitious 2028 targets as evidence of robust execution and a clear path to margin expansion.
The new guidance and targets reinforce Smith & Nephew’s long‑term value proposition. By raising its free‑cash‑flow forecast and setting higher growth expectations, the company demonstrates confidence in its RISE strategy and its capacity to generate sustainable cash generation. These developments are likely to influence future capital‑allocation decisions and reinforce investor confidence in the firm’s strategic direction.
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