Smith & Nephew(SNN) - 2024 Q4 - Annual Report

Financial Performance - Smith+Nephew reported fourth quarter revenue of $1,571 million, reflecting an underlying growth of 8.3% and a reported growth of 7.8% after a -50bps foreign exchange headwind[9]. - Full year revenue reached $5,810 million, with an underlying growth of 5.3% and reported growth of 4.7%, impacted by a -60bps foreign exchange headwind[9]. - Operating profit for 2024 increased to $657 million, up 54.6% from $425 million in 2023, resulting in an operating profit margin of 11.3%[9]. - Trading profit grew 8.2% to $1,049 million, with a trading profit margin of 18.1%, an improvement of 60bps from the previous year[15]. - Cash generated from operations significantly improved to $1,245 million, a 50.2% increase from $829 million in 2023, with trading cash conversion rising to 95%[15]. - Free cash flow surged to $551 million, a substantial increase of 327.1% compared to $129 million in 2023[15]. - Adjusted earnings per share (EPSA) rose to 84.3¢, up from 82.8¢ in 2023, while basic EPS increased to 47.2¢ from 30.2¢[97]. - The Group reported a profit before taxation of $498 million for 2024, compared to $290 million in 2023, representing an increase of 71.0%[115]. - The Group reported total revenue of $5,810 million for 2024, an increase of 4.7% from $5,549 million in 2023[153]. - Annual sales for 2024 reached $5.8 billion, an increase from $5.549 billion in 2023, reflecting a growth of approximately 4.5%[111]. Product Development and Innovation - The company launched nearly 50 new products over the last three years, contributing to over 60% of revenue growth in 2024[11]. - The company launched 16 new products in 2024, contributing to over 60% of underlying revenue growth from products launched in the last five years[40][41]. - Advanced Wound Management reported improved performance driven by a leading position in the high-growth Negative Pressure Wound Therapy (NPWT) segment, contributing to an underlying revenue growth of 12.2% in Q4 2024[37][70]. - Sports Medicine achieved a strong performance with a steady stream of innovation and successful integration of acquired assets, despite facing significant VBP headwinds in China in 2024[36]. Market Performance - The US market showed strong underlying revenue growth of 11.9%, while Emerging Markets faced a decline of -2.3% due to challenges in China[56]. - Established Markets saw underlying revenue growth of 5.5%, with the US at 4.8% and Other Established Markets at 6.7%[75]. - Orthopaedics business unit delivered underlying revenue growth of 4.6%, with Knee Implants at 1.3% and Hip Implants at 4.0%[79]. - Sports Medicine Joint Repair achieved underlying revenue growth of 5.3%, with strong double-digit growth from REGENETEN, and 15.9% growth excluding China[66][67]. - Advanced Wound Bioactives achieved underlying revenue growth of 20.3% and reported growth of 20.1%, driven by strong double-digit growth in skin substitutes following the launch of GRAFIX PLUS[71]. - Advanced Wound Devices reported underlying revenue growth of 20.6% and reported growth of 19.9%, supported by the RENASYS and PICO Negative Pressure Wound Therapy Systems[72]. Strategic Initiatives - The 12-Point Plan has led to a near 9% net reduction in total workforce since its inception, with significant productivity improvements and cost savings achieved[30]. - For 2025, Smith+Nephew targets underlying revenue growth of around 5% and a trading profit margin between 19.0% and 20.0%[15]. - The company expects a trading profit margin of 19% to 20%, driven by operating leverage, cost reductions, and network optimization benefits[107]. - Trading cash conversion is projected to be between 80% to 90%, with restructuring costs estimated at around $45 million for 2025[108]. Financial Position and Cash Flow - The Group had access to $617 million in cash and cash equivalents and a net debt of $2,513 million as of December 31, 2024[125]. - The Group has committed facilities of $4.1 billion with an average maturity of 5.5 years, with no debt due for repayment in 2025[125]. - The Group's net debt decreased to $2,709 million in 2024 from $2,776 million in 2023, with available committed facilities increasing to $4.1 billion[185]. - The Group's cash and cash equivalents increased to $619 million in 2024 from $302 million in 2023[185]. - Cash generated from operations in 2024 was $1.245 billion, a substantial rise from $829 million in 2023, marking a growth of 50.1%[119]. Acquisitions and Investments - The acquisition of CartiHeal was completed for a total consideration of $231 million, which includes $180 million in cash and $49 million in contingent consideration[176][177]. Taxation and Dividends - The reported tax charge for 2024 was $86 million, up from $27 million in 2023, attributed to increased profits[170]. - The final dividend for 2023 was $202 million, with a proposed final dividend for 2024 also set at 23.1 US cents per share[174][175].