Smith & Nephew PLC (LSE:SN) has launched a new corporate strategy designed to give stronger returns for shareholders, alongside issuing medium-term financial targets through to 2028, alongside updated guidance for 2025 and a provisional outlook for accelerating growth in 2026.
The knee and hip replacement company named the strategy RISE, as it will drive improved financial and operational performance by focusing on four pillars: Reaching more patients, Innovation, Scaling through investment, and efficient Execution.
The strategy builds on progress made under the company’s previous 12-point plan transformation, put in place when chief executive officer Deepak Nath started in 2022.
"Smith+Nephew's new RISE strategy represents an ambitious but achievable new chapter," Nath said, saying the actions under his 12-point plan "have created a fundamentally stronger business than three years ago and a springboard for future growth".
As part of its 2028 financial targets, the FTSE 100 group aims to deliver 6-7% compound annual revenue growth, 9-10% trading profit growth rate and over $1 billion in free cash flow.
Guidance for 2025 has been tightened up, with underlying revenue growth to be around 5.8% based on current exchange rates, trading profit margin now expected to be at least 19.5%, while free cash flow guidance was raised to around $800 million.
However, a non-cash provision of around $200 million will be taken in 2025 to support the "rationalisation" of the portfolio, expected to reduce gross inventory by around $500 million.
For 2026, the company anticipates underlying revenue growth of around 6%, with profit growth ahead of revenue, and another year of $800 million free cash flow.
Smith+Nephew is holding Capital Markets Day events in London on 8 December and in New York on 11 December to present its strategy and demonstrate key products.