Financial Data and Key Metrics Changes - The company reported revenue of $3 billion in the first half, reflecting a 5% underlying growth compared to the same period in 2024, with reported revenue up 4.7% [22][24] - Gross profit was £2.1 billion, resulting in a gross margin of 70.5%, a 40 basis point increase from the prior year [24] - Profit grew 11.2% to £523 million, with a margin of 17.7%, up 100 basis points [25][32] - Free cash flow increased over 500% to £244 million, with expectations to exceed £600 million for the full year [36][38] Business Unit Performance Changes - Orthopedics grew 4.1%, while Sports Medicine and ENT also grew 4.1%, with underlying growth excluding China at 9% [23] - Advanced Wound Management grew 7.1%, with notable contributions from bioactives and single-use negative pressure platforms [19][20] - The robotics segment in orthopedics saw a growth of 39.8%, reflecting strong placements in the U.S. [13] Market Performance Changes - The U.S. market grew 8.7%, while other established markets grew 7.4%. Emerging markets saw a slight decline of 0.2%, but excluding China, they grew by 12.2% [7][8] - The company expects the headwinds from China to ease in the second half of the year as distributor destocking reduces [10][39] Company Strategy and Industry Competition - The company is focused on maintaining a higher growth trajectory, with 75% of growth in H1 coming from products launched in the last five years [44][46] - The 12 plan aims to enhance operational efficiencies and drive accountability, with a target of £325 to £375 million in savings from 2023 to 2027 [30][31] - The company plans to launch new products and expand its offerings in robotics and sports medicine, enhancing its competitive position [45][49] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving full-year growth targets despite uncertainties, including tariff impacts and market conditions [4][53] - The company anticipates a step-up in margin in the second half, driven by operational savings and easing headwinds from China [27][38] - Management highlighted the importance of innovation and product launches in sustaining revenue growth [43][44] Other Important Information - The company announced a $500 million share buyback program for 2025, funded by operational efficiencies and cash flow [5][37] - Inventory management has improved, with a reduction in days of inventory to 506 days, aligning with the company's focus on operational efficiency [32][34] Q&A Session Summary Question: Is there upside to the 5% revenue target for the full year? - Management feels good about guidance for the full year, acknowledging both positives and negatives affecting revenue [51][52] Question: Can you provide details on margin guidance and the potential for achieving the upper end of the margin range? - Management expects a step-up in margin in the second half, with operational savings and tariff impacts balancing out [53][59] Question: What is being done to address the softness in U.S. knees? - Management noted a focus on higher volume accounts and portfolio rationalization, which may impact top-line growth but improve margins [54][56]

Financial Data and Key Metrics Changes - The company reported a revenue of $1.6 billion for the quarter, reflecting a 6.7% underlying growth and a 7.8% reported growth, aided by a 110 basis point tailwind from foreign exchange [5][21] - Gross profit was £2.1 billion, resulting in a gross margin of 70.5%, which is a 40 basis point increase from the prior year [23] - Profit grew 11.2% to £523 million with a margin of 17.7%, up 100 basis points [24] - Trading cash flow increased by 70% with almost $250 million of free cash flow in the first half [4][33] - Earnings per share grew 37% to 33.5¢, and adjusted earnings per share grew 14% to 42.9¢ [31] Business Unit Performance Changes - Orthopedics grew 5.5% underlying, with total reconstruction robotics growing 5.2% [7] - Sports Medicine and ENT grew 5.7% in the quarter, with joint repair growth at 8.4% [13] - Advanced Wound Management saw growth increase to 10.2%, driven by a rebound in bioactives [16] - Trauma and extremities grew 4.4%, with the ATOS growth contribution steadily increasing [12] Market Performance Changes - The US market grew 8.7%, while other established markets grew 7.4% [6] - Emerging markets declined by 0.2%, but excluding China, they grew by 12.2% [6] - The company expects the headwind from China to ease in the second half of the year [6][8] Company Strategy and Industry Competition - The company is focused on maintaining a higher growth trajectory, with a target of 5% growth for the full year [50] - A $500 million share buyback is planned for 2025, funded by operational efficiencies [4][35] - The company is undergoing a transformation plan aimed at improving operational efficiencies and margin expansion [49] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving full-year margin guidance of 19% to 20%, despite uncertainties related to tariffs [3][36] - The company anticipates a step-up in margin in the second half, driven by cost savings and reduced headwinds from China [36] - Management noted that the impacts of volume-based procurement in China are expected to ease [6][36] Other Important Information - The company has implemented a zero-based budgeting approach, targeting gross run rate savings of £325 to £375 million from 2023 through 2027 [29] - Inventory management has improved, with a reduction in days of inventory to 506 days [32] Q&A Session Summary Question: Is there upside to the 5% revenue target for the full year? - Management feels good about guidance for the full year, noting both positives and negatives in the outlook [50][52] Question: Can you walk us through the bridge in H2 margin? - Management expects a step-up in margin in the second half, with various factors influencing the margin guidance [61] Question: What is being done regarding US knees? - Management highlighted sequential improvement in US orthopedics and discussed efforts to refocus on higher volume accounts [54][56] Question: What are the drivers of operating savings in H2? - Savings are coming from procurement, warehousing, distribution, and other areas, with visibility on achieving these savings [76] Question: What is the outlook for inventory levels? - Management expects continued improvement in inventory levels, particularly in orthopedics, with good progress noted [92]