March 2 (Reuters) - British medical products maker Smith & Nephew posted a 15.5% jump in annual profit on Monday, building on the success of its turnaround plans, which delivered cost savings and
Smith & Nephew CEO backs 2026 outlook despite Middle East conflict, higher tariff hit
Smith & Nephew's 2026 Guidance and Market Response
By Yamini Kalia
March 2 (Reuters) - Smith & Nephew's CEO backed the company's 2026 guidance on Monday despite potential disruptions from the Middle East conflict and higher tariff costs, after the medical products maker broadly met targets for profit and revenue last year.
Company Performance and Turnaround
Smith & Nephew, which makes orthopaedic implants, wound dressings, and other surgical aids, finished a three‑year turnaround that revamped its orthopaedic division, cut costs, and lifted growth in other units, after inflation and supply‑chain disruptions hit margins.
Impact of Tariffs and Middle East Operations
The company, which expects another $60 million tariff hit in 2026 after a $17 million charge last year, also has meaningful Middle East operations, where the war in Iran has added to uncertainty.
Business Continuity Amid Conflict
"We've got our business continuity and crisis teams deployed to ensure the safety and well-being of our employees and ensuring the continuity of our business there," CEO Deepak Nath told Reuters.
Smith & Nephew has a presence in Dubai and Riyadh with operations throughout the Middle East via distributors.
Risks from Suez Canal and Inventory Management
Nath added that the main risk of the conflict would be a Suez Canal closure, which could lengthen shipping times for products moving from China to Europe, but added that current inventory levels support its demand in the Middle East for now.
"At this stage, given what we know today, we stand behind the guidance that we've communicated," Nath said.
Market Reaction and Analyst Views
Shares Drop and Analyst Skepticism
SHARES DROP 5% AFTER RESULTS
Some analysts disagreed.
"We do not see today's results as sufficient to underpin 2026 guidance at this stage," Jack Reynolds-Clark, a RBC Capital Markets analyst said, adding that there remains significant risk of guidance downgrades over the year.
Shares in the company dropped more than 5% on Monday, underperforming a 1% fall on the wider London market.
Financial Forecasts and Results
The company forecast a trading profit of about $1.3 billion for 2026 and reiterated its expectation of roughly 6% underlying revenue growth.
It reported a trading profit of $1.21 billion for 2025, up 15.5% and in line with market expectations.
(Reporting by Yamini Kalia in Bengaluru; Editing by Rashmi Aich and Toby Chopra)
