Ladies and gentlemen, welcome to the Smith & Nephew Q1 Trading Report. My name is Jenny, and I will be coordinating your call today. Certain statements in this presentation are forward-looking statements. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from those included in those statements due to a variety of factors. More information about these factors is contained in the company's filings with the Securities and Exchange Commission. I will now hand over to Deepak Nath to begin. Please go ahead.

Thank you. Good morning. I'm joined here by our Chief Financial Officer, John Rogers. I'm pleased to report a good start to the year. We achieved 3.1% underlying revenue growth in the first quarter, which was ahead of the guidance we provided in February, with consistent performance across all of our business units. Sports Medicine and Advanced Wound Management continue to perform well in established markets and U.S. recon is maintaining the improvement that we saw in 2024. We have successfully absorbed known headwinds, including a 240 basis points headwind in China and one fewer trading day. As we get into the details of the quarter, you'll see that we're building on the operational and commercial improvements of the 12-Point Plan, which has brought better product availability, better commercial execution, and the focus and accountability of the business unit model. Those foundations are enabling innovation-driven growth across our key platforms. To highlight a few, CORI, EVOS, REGENETEN, and our Negative Pressure Wound Therapy portfolio all delivered strong double-digit growth in the quarter and are visibly driving the broader segment growth rates. We're also delivering further innovations at a rapid pace. Later, I'll discuss new product launches that are expanding our offerings in the high-growth categories of foam dressings and cementless knees. Additionally, I'll share new clinical evidence related to OXINIUM and rotator cuff repair. Overall, this quarter keeps us on track for our full year guidance, which remains unchanged on both revenue growth and trading margin. We should see higher growth in the remaining nine months, giving a lower trading day effect on growth for the full year and the peak of the China headwinds having passed, along with continued fundamental progress in our commercial delivery, particularly in the fifth piece. The drivers of the guided step-up in profitability have been in place for some time now, and we should see the benefits of our cost savings and network optimization flow through to the P&L. John will come back later to the effects of the recently announced tariffs on our business. But to summarize for 2025, we expect to absorb the impact within our existing margin guidance. And first, John will take you through the detail.

Thank you, Deepak, and good morning, everyone. So revenue for the quarter was $1.4 billion with a 3.1% underlying growth and 1.6% reported after a 150 basis points headwind from foreign exchange. Those growth rates include the effect of one fewer trading day compared to the first quarter of 2024, which is considered proportionately reduced growth by around 1.7 percentage points. Growth was largely consistent across the business units, and I'll come to the detail in a moment. Driven by region, growth was stronger in established markets with 3.6% growth in the U.S. and 5% in other established markets. The 1.7% decline in emerging markets was due to the continuing headwinds in China, which we believe has now peaked. Growth in other emerging markets was much stronger at 14.7%. For the business units, I'll start with Orthopaedics, which grew by 3.2% in the quarter and 5.1% excluding China. As indicated with the full year results, we've changed our reporting practice around robotics to be more in line with our Orthopaedics peers. As of this quarter, robotics consumable sales are now recorded under the procedure where they are used, while capital and service revenue remain in other recon. Growth rates are all on a comparable basis. In U.S. recon, the sequential trend in the headline underlying growth numbers mainly reflects trading days. Normalizing for that, U.S. recon maintained the improved performance from the previous quarter. The dynamics continue to be encouraging with customer churn moving to a net favorable position in Q4 and maintaining that in Q1, with a pipeline of competitive conversions building for the rest of 2025. On the product portfolio, CATALYSTEM continues to perform well against our plans with excellent feedback from existing and competitive customers. Outside the U.S, recon growth reflects an expected slow quarter in China with distributors continuing to reduce their inventory of implants. The overall level in the channel has come down significantly, and we expect it to reach a normal level again in the middle of the year. Excluding China, OUS growth was healthier at around four points higher in Knees and seven points higher in Hips. Other recon grew by 46.6%, driven by robotics, reflecting both growth in units placed and a higher proportion of outright capital sales in the quarter's business mix. Trauma & Extremities grew by 6.3%. As in recent quarters, the EVOS Plating System was the primary major growth driver. The growth contribution of the AETOS Shoulder is increasingly significant, and we continue to develop the platform. We'll launch a stemless implant in the U.S. in the coming quarters, and we also aim to introduce planning solutions in the second half as part of CORIOGRAPH, with execution on CORI to follow in 2026. Coming back to U.S. recon growth, we are reflecting the new reporting of robotics consumables. As I mentioned earlier, you can see that we have maintained the improvement from Q4. Our expectation is for further improvement in average daily sales growth as we move through 2025, supported by product availability, the improvements we've made in commercial execution, and the benefits of key growth products like CATALYSTEM and CORI. Sports Medicine and ENT grew by 2.4%, largely reflecting the headwind from China. This was due to lower year-on-year pricing in VBP in joint repair and early effects in Arthroscopic Enabling Technologies as we proactively managed the channel ahead of the expected implementation in the second half of the year. We believe we are now past the peak of the China headwind. Comparisons in joint repair will become easier in Q2 with the effect fully lapping midyear. Although the AET implementation is still to come, it should be a smaller overall drag. At the same time, consistent performance from key launches and growth drivers continued in the rest of the world, even after the strong finish to 2024, and this should be increasingly reflected in headline growth as we move through the year. For Q1, joint repair grew by 2.9% and 10.6%, excluding China. REGENETEN remains a key driver with strong double-digit growth. We added further to the evidence base with the publication of a two-year follow-up from a randomized controlled trial of rotator cuff repair augmented with REGENETEN, showing significantly lower re-tear rates compared with repair alone. There was also good momentum from new product launches, including Q-FIX KNOTLESS and developing our foot and ankle repair business. Arthroscopic Enabling Technologies grew by 3.3%, excluding China. There was solid performance across multiple categories with double-digit growth from both Video and WEREWOLF FASTSEAL. FASTSEAL is an application of our COBLATION technology in orthopedic procedures and is a leading example of commercial synergy in our portfolio. ENT grew by 7.8%, marking a return to more normalized growth after Q4. This growth was led by the tonsil and adenoid business with the HALO Wand for the COBLATION Intracapsular Tonsillectomy technique. We also continued the rollout of the ARIS Wand, which further extends the use of COBLATION technology in turbinate reduction with launches in Europe and emerging markets. I'll finish with Advanced Wound Management, which grew by 3.8% in the quarter. Advanced Wound Care grew 2.5% with high single-digit growth in foam dressings. We continue to develop our foam portfolio and are in the early stages of launching ALLEVYN Ag+ SURGICAL into the U.S. market. Bioactives had a slower quarter as expected, with a decline of 2%. While skin substitutes remained in double-digit growth, this has started to moderate as the benefit of the GRAFIX PLUS launch eases. There was also a slow quarter for SANTYL after a strong finish to Q4, again reflecting wholesaler stocking patterns. As a reminder, we expect Advanced Wound Care growth for the full year to be in the low single digits. Lastly, Advanced Wound Devices saw impressive growth of 15.7%, mainly driven by Negative Pressure Wound Therapy with double-digit growth from both PICO and RENASYS. I'll finish with our outlook. As you can see on the slide, it's unchanged. There's clearly a lot of interest in the implications of the tariffs announced by the U.S. government, and the situation remains dynamic. But to give you some sense of our business mix, just over half of our revenue is from the U.S., of which around two-thirds is manufactured domestically. We also manufacture in Costa Rica, the UK, Malaysia, China, and Switzerland. We're working to mitigate tariffs on products and raw materials imported into the U.S. as far as we can. In particular, we have a global manufacturing network that we can leverage in terms of mix and supply routes. Our approach is not to rely on external factors, but there may also be some mitigation of foreign exchange, and we are engaging with industry groups to explore the potential for expansion. Based on the tariffs as currently announced and including those coming into effect after the current course, we expect a net impact of around $15 million to $20 million, which we expect to be able to absorb in our unchanged full year guidance. And with that, I'll hand back to Deepak.

Thanks, John. It's a good first quarter, building on the operational and commercial improvements to the 12-Point Plan. Better product availability, commercial execution, and the focus and accountability of the business unit have all established strong foundations for sustainably improved performance. As I set out at the beginning, innovation also continues to be a key component of our growth story, and you can see that playing out across our businesses. In Orthopaedics, EVOS, AETOS, CATALYSTEM, and CORI are all growing well. In Sports and ENT, there's regenerative, the foot and ankle portfolio, and the multiple applications of our COBLATION technology across our surgical businesses. In Advanced Wound Management, we had good growth in foams, skin substitutes, and negative pressure. And we're continuing to build on that with a high cadence of innovation, delivering further new products and new clinical evidence in the quarter. In recon, we further developed our cementless knee offering with the addition of the LEGION Medial Stabilized Inserts, which received 510(k) clearance. These are designed to provide surgeons with stability and improved kinematics while aligning LEGION with three major market trends in knees: the shift to medial stabilized inserts, which are now used in over 30% of procedures, and the trends towards robotics and cementless fixation. In Wound, ALLEVYN Ag+ SURGICAL is in the early stages of its U.S. launch, adding a new antimicrobial dressing to our foams portfolio, including new silicone technology for gentle adhesion. We're continuing to innovate in this category as a high-growth segment within Advanced Wound Care. On clinical evidence, OXINIUM continues to demonstrate exceptional long-term performance. A report from the Australian National Registry reveals a 20-year survival rate in total hip arthroplasty of 94.1%, which is the highest among all bearing combinations. This corroborates similar results and peer-reviewed publications from the National Joint Registry in the UK and is powerful evidence of our proprietary technology. For REGENETEN, building support for adoption and coverage through clinical evidence is a key part of our growth story. We added significant new data in the quarter with two-year follow-up data from a randomized controlled trial in full thickness rotator cuff repair. REGENETEN showed a highly statistically significant reduction in the re-tear rate with a 65% lower relative risk compared to repair alone. With the combination of increasing penetration in rotator cuff, supported by evidence, and the addition of new clinical applications in ligaments and foot and ankle, REGENETEN is set to continue as a long-term growth driver for the company. I've said many times that 2025 is a key year of delivery, and 3.1% growth in Q1 is a good first step. When I look at the moving parts, the long-term tailwinds of commercial improvements and innovation-driven growth are continuing to come through, while the two headwinds of China and trading days have both peaked. This is a good setup for the rest of 2025 and beyond, and I look forward to updating you further as we move through the year. And now we can move to your questions.

We will now have our first question from Richard Felton from Goldman Sachs. Please go ahead.

Two, please. The first one is on the phasing of growth through the year. On your full year call, you shared some reasonably detailed thoughts on how to think about phasing. Has anything changed in your view as you move through Q1? Can you maybe remind us of how you see top line growth progressing in Q2 and beyond? That's the first one. My second question is a product question on REGENETEN. Could you maybe give us a little bit more color on what is driving growth within that product family? How big it is in your portfolio today? And then following the 510 clearance for the extra articular ligament repair at the end of last year, how much traction are you seeing there? And how big could that opportunity be over time? Thank you.

I'll maybe take a quick shot at REGENETEN, and I'll turn to John to elaborate. But generally speaking, Q1 was our lowest growth quarter as this is what we guided to at full year. And because of the receding impact of the headwind from China as we flow through the year and the unfavorable impact of trading days also falling away, we should have growth pick up sequentially in each quarter going through. So we expect in Sports for growth excluding China to continue at near double digits, and in Wound as well across all categories to continue to build as we proceed. In Orthopaedics, what we have guided to is specifically in the U.S. recon side for sequential improvement quarter-on-quarter as we get to market growth levels by Q4 of this year in recon, and we are on track to achieve that. So I'll let John cover further details beyond that, but you should expect sequential improvement as we flow through the year. In terms of REGENETEN, last year, most of REGENETEN utilization was in the shoulder. We've indicated that REGENETEN is a platform technology, and we expect to develop evidence for appropriate use of that in other joints. What we have found now is roughly 10% of our utilization of REGENETEN is actually in foot and ankle, which is a change relative to where we were last year, and that points to increasing utilization of REGENETEN, not only with further penetration into shoulder for rotator cuff repair, but also now increasing adoption in other joints, with foot and ankle being the second category. So we expect REGENETEN to be a meaningful growth driver as we called out that it's now a material part of the growth story.

And maybe just to add a little color on the growth trajectory. I think Deepak has covered some of the key component parts, but we all expect that Q1 would be a little bit soft. We guided to the 1.2 obviously delivering 3.1 base in Q1. We expect to see a step-up in Q2. And then in all likelihood, I think Q3 will be a little bit of a further step up. So we'll see another step up in Q3. And then Q4 will actually step back a little bit because obviously, we had a very strong Q4 in 2024. But generally speaking, that's the shape of the growth trajectory, all of which, of course, aggregates to around 5% growth for the year overall.

Next, we will have Julien Dormois from Jefferies. Please go ahead.

I have two. The first one relates to the performance of the recon business outside of the U.S. So it would be interesting if you could shed more light on what's going on outside of the U.S. So obviously, your performance in the U.S. is improving by the day, but maybe at the expense of what's happening outside of the U.S. So maybe if you could shed more light on what's happening there, that would be helpful. And the second question relates to more of a housekeeping question in light of the market swings in FX. Could you just remind us of what your expectations would be at this stage for the FX impact on your margin this year? I think you have a hedging policy in place that probably delays some of the potential benefits from a weaker dollar, but any color there would be helpful. Thank you.

Yeah, so just on your last question about the margin impact. I think we said at the prelims, we expect the Forex to be broadly neutral. Obviously, since then, there's been a weakening of the dollar. And we think that's going to translate into a tailwind of 20 to 25 basis points related to the full year. Of course, that could change with the stepups in the volatile market environment, but 20 to 25 basis points or so. In terms of the question on OUS Orthopaedics, I mean, we saw 2.7% growth for the quarter. So it seems reasonably healthy. Knees are slightly positive, Hips are a little bit more challenged, but we had good growth in other recon, plus 46%. So good quality sales in the quarter. But overall, we're very comfortable with the trajectory. We should see Q2 be relatively similar to Q1, and then we should see a step-up in Q3 come through as the expectation.

We will next have Jack Reynolds-Clark from RBC Capital Markets.

Two for me also. So starting with revenue guide. So obviously, Q1 is stronger than expected. I'm just wondering how Q2 is shaping up so far? John, you talked about a step-up in Q2. Are you seeing that kind of come through? And then should we be thinking about potential upside around your 5% underlying revenue guide, given that you're not expecting things really to slow down through the remainder of the year? And then the second question was just on tariffs. Could you talk a little bit more about the offsets you're implementing, i.e., sort of give a bit of detail around the operational offsets and how much you might be able to implement price increases?

Sure. In terms of revenue guide, obviously, we're not commenting on subsequent quarters, but we've maintained our revenue guidance of around 5% for the full year. And given that we exited at 3.1%, you can expect that growth should step up in subsequent quarters for us to attain the revenue guide. And we feel good about how we're positioned really right across the portfolio. When you look at our business across regions, we already commented on China, but look at all the established markets and emerging markets, we feel good about how we're positioned there, especially in Orthopaedics, particularly in the U.S. recon part, which was the last bit of our business we were expecting to turn around this year. We feel good about how we're positioned and how we performed in the quarter in terms of maintaining the momentum from Q4. As we look at the rest of the year, we're particularly encouraged by the fact that the churn in surgeons has reduced. That started to minimize towards the end of Q3 and really turned positive, resulting in a net gain of surgeons in Q4. This picture was maintained in Q1 and sets us up nicely for the rest of the year. The contrast to that is in years past, where we had surgeon churn in the negative territory at the beginning of the year, which of course, created challenges for the balance of the year. So we feel good about how we're positioned to achieve the top line for the guidance we've provided. In terms of tariffs, what we're focused on is mitigating actions for that. As John pointed out, we've got a manufacturing network that gives us a measure of flexibility in how we supply the market, and how we direct product flows in order to minimize the impact of tariffs. And we've given you a sense of what the impact is going to be net of the mitigations that we can foresee operationally. And in terms of the longer term, we've got the manufacturing sites where we've got it, with different levels of exposure across our businesses. In Orthopaedics, we're relatively well positioned because of our manufacturing presence in Memphis, which is our major orthopaedics manufacturing center. We also have Malaysia ramping up at the same time that allows us to position ourselves depending on how retaliatory tariffs go into effect. So it's a very dynamic picture. As John said, we'll have to figure out how we balance where we manufacture and how we supply markets, from which factories to supply the markets. So those are some of the things underneath the headline of mitigations.

And maybe just to help you and clarify our guidance number, the bottom end of our range is based on the current, what I might describe as the 10% base case scenario, so basically 10% plus, with China. The bottom end assumes that being in place for the remainder of the year. The upper end of our range assumes the reversion to the announced rates coming through on July 8. That, of course, includes the China retaliatory rate as well. So just to be clear, what we've assumed in giving you that guidance number.

We will now have Lisa Clive from Bernstein.

Could you provide more guidance on the margin progression related to the ramp-up in Malaysia? Specifically, are the four plants you mentioned closing all located in Europe? I’d like to understand how this affects your COGS for this year and possibly next year. Additionally, thank you for the information on tariffs; it's very helpful. Between the U.S. and Europe, while it seems you are well positioned with U.S. and China, my understanding is there's more back-and-forth with the U.S. and Europe. I believe there is a significant amount of Sports Medicine products that move from the U.S. to Europe. In a worst-case scenario where tensions escalate with Europe, how well are you positioned to manage that?

Sure. I'll take that. Lisa, so first, in terms of margin progression, what we've said in 2025 is the step-up in margin will come through the benefits of the network actions we've taken in Orthopaedics coming through this year. So we've closed four plants, as you alluded to. Three of them were in Europe, and one in China. That's an important part; in other words, that taking out of fixed costs associated with those plants is where the benefit comes in. And what we've done is transfer the production that was occurring in those plants into either Memphis or Malaysia. It's important to keep in mind that these plants were specialized by particular SKUs. So it's not like we have four factories producing everything, right? So there were particular SKUs being produced in these factories, which we've transferred, as I said, into Malaysia and into Memphis. From a margin progression standpoint, it's the overall costs coming out that contribute to that, along with the benefits of production coming through in Malaysia, where we have lower labor costs, and in Memphis, where we've got greater scale than in those factories, translating into better cost of goods sold. So that's the benefit that we see coming through in 2025 as a key underpin for the step-up in the back half of the year. Regarding tariffs, in terms of U.S. and Europe, we've got China, Costa Rica, and Malaysia. Roughly two-thirds of the tariff impacts come from China. So in that sense, it's a dynamic picture, as John said. We'll have to figure out how we manufacture and supply markets based on the retaliatory tariffs that go into effect.

And maybe just to add on the margin piece, I mean, we expect the forex impact to be broadly neutral. Since then, there's been a weakening of the dollar, and we think that's going to translate into a tailwind of 20 to 25 basis points related to the full year, which could change with the ever-volatile market environment. But the 20 to 25 basis points or so should remain stable.

We will next have Hassan Al-Wakeel from Barclays.

I have three, please. Firstly, on margin, Deepak at the full year, you pointed to tightening the range at the Q1 stage. Appreciate things are changing very rapidly. Given the $15 million to $20 million impact from tariffs or around 30 basis points, is the lower end now more realistic? Secondly, on growth, which was stronger than your expectation at the full year, can you talk about any updated views on hospital utilization for the rest of the year? And also any competitive dynamics that you're observing given some launches in hips by some of your peers? And then finally, can you talk about the strength in CORI placement in the quarter and what is driving this regionally? Also, given the restatement of consumable revenue, can you provide the growth in consumable revenue in the quarter that has now moved to recon and whether this was meaningfully different to underlying growth in the recon business prior to the restatement?

So in terms of margin, no, we've set a range of 19% to 20%. We've said you should think somewhere in the middle of that as the expected outcome and that hasn't changed. You can work that out now, given that we've said that in the face of a tariff impact of $15 million to $20 million. So bottom line, no change in the guide or expected outcome. Second, in terms of growth being stronger, we've anchored to around 5% at the beginning of the year, and we've reiterated that guidance. Implied within that is expected step-up, which applies across our businesses and geographies. Regarding competitive dynamics in Hips, we feel very good about how we're positioned with CATALYSTEM. Until recently, we didn't have a short stem offering, which previously limited participation in the direct anterior approach, now more significant in hip procedures, particularly in the United States. With the launch of CATALYSTEM, we can participate more fully in that growing market. The uptake and feedback have been excellent and we've received positive results from both our surgeons and competitive surgeons. I’m happy with the growth potential. As for utilization in overall procedures, I historically hesitated to comment directly regarding the recon market in the U.S., given prior performance challenges. However, I feel good about our ability to progress related to market growth levels in each quarter. The CORI placements have been strong across geographic regions. We've been quite strong OUS over the last few years. We are placing them in hospital settings and ASCs, and utilization remains healthy, which is a positive sign.

And just to add a little more detail on consumables and the impact, regarding U.S. Hips and the numbers discussed. The figures under the new reporting regime for Q4 versus Q1 are 4.2 in new money, and then 4.1 in old money. So it really doesn't make much difference for U.S. Hips. In relation to Knees, obviously, where it's a bigger impact, we're shifting around $5 million to $6 million from other recon into U.S. Knees, affecting the Q4 number and contributing to growth.

We'll next have Kane Slutzkin from Deutsche Bank.

Just a quick one, John, on the U.S. recon. I seem to recall you saying at the sort of roundtable in February that the U.S. knees needed to be sort of 2% in Q1 and sort of the exit at 3% in order to be on track to return to market growth. Could you just confirm that was the case? And on the adjusted measures you've given for the trading days, would it be fair to say you're there and thereabouts?

Spot on. I mean, I think we said from an average daily sales basis, we want to be around 2% or so. We expect to see that grow on that basis through Q2, Q3, and we plan to exit the year at around 4%. The numbers we're reporting today confirm that trajectory, and we remain confident in looking forward to our pipeline and the trends in account management.

Right. John, sorry, I just missed something; you mentioned earlier regarding the scenarios that impact the lower and upper end of that 19% to 20% range. I appreciate Deepak gave us kind of a view that you're likely to come in the middle. But could you just relay those scenarios?

Yes. The bottom end of the range is based on what I describe as being the current 10% base case and most countries on a 10% tariff. The upper end of the range assumes reverting back to the tariffs as announced. That represents the top end of the range, so just a clarity on that guidance.

We will next take David Adlington from JPMorgan.

Firstly, just on China, could you remind us where China peaked as a percentage of sales and where you've come down to as of this quarter as a percentage of sales? And following on from that, does it still make commercial sense to maintain a presence in China?

So today, we saw the peak in Q1. China was around 7% of sales, and now we expect it down to about 1.7% to 1.8% of sales for this year. Our profitability in China has improved as we've adapted our strategy and model, but we need to make the operations profitable at lower price levels. We continue to leverage our lessons learned in order to optimize our presence there.

In Q1, we were down roughly 50% in China, which we see as the peak of the impact. In Q2, we forecast to be down 35% to 40%, with further reductions expected in the third and fourth quarters correlating with our overall growth improvement.

We will next have Veronika Dubajova from Citi.

Most has been asked and answered already, but maybe just two. One, looking into 2026 and the tariff impact as it annualizes out on the worst-case scenario, is there any more mitigation that you can do, John, as you think about 2026? Or should we be taking the number you've given us for this year and doubling it for next year as far as tariffs are concerned? That's my first question. And then my second question is about the strength in devices; if you can discuss what's driving it and how sustainable you feel that is through the rest of the year? Thank you, guys.

Well, I think it's clear there are many evolving factors related to tariffs, so we have done extensive scenario planning. Looking ahead, it seems reasonable to achieve gradual improvement in margin trajectory and the savings through operational changes while considering tariff adjustments. But we can proceed with confidence into 2026 and beyond.

As for devices, it's both our single-use products like PICO and traditional items in RENASYS and other products, and all are growing. PICO has shown a long history of growth and continued performance sets a positive trajectory. With RENASYS, we’re also seeing stronger growth, and we expect it to further enhance our growth story. Overall, we’re very pleased with the performance across our product categories.

We will next have Dylan van Haaften from Stifel.

So just first one, just on the current working capital and with Ortho, because from my understanding, you guys have missed a couple of years of working capital theoretically in Ortho. Does that help you offset some of the tariff impacts? And is that sort of embedded into this number?

The short answer is yes, but I wouldn't get overly optimistic about the favorable impact of inventory since the details matter. We had high inventory levels and wrong mixes previously. The new inventory levels represent a much healthier mix than before. While existing inventory is still beneficial, it’s important we produce the right inventory mix to meet demand across tariffs.

And just one follow-up. Are you guys at all concerned about any consumer dynamics? And could you remind us of the rough ortho private payer and co-pay exposure? If you are at all concerned, any change in behavior could change growth dynamics for the market.

There's enough uncertainty in this area. Demand is driven by demographics, and the demand for our products is based on medical need. Of course, patient access to care remains a concern, but we have raised our guidance considering existing uncertainties. We continue to monitor the dynamics closely.

We will next have Robert Davies from Morgan Stanley.

I had three. The first one was just in terms of the China phasing that you gave, the sort of down 50%, which is progressing towards minus 10% over the year. Just curious in terms of visibility, give us a bit more color perhaps in terms of where that comes from, what's the underlying assumption in that trajectory over the year? The second one was just on manufacturing or factory closures in different places. Is there anything more to do on that? That sort of ties in with the third question, which is just where we are big picture on the 12-Point Plan. What are the key elements of the 12-Point Plan you still have to achieve? Are there any additional opportunities that you've come across over the last year relative to what you started out with?

In terms of factory closures, the hard work of closing factories is completed, including the people impact. We expect to see financial benefits from transferring production to remaining facilities. The challenges involved in this task are resolved, meaning no further operational adjustments are needed. As for the 12-Point Plan, there will be ongoing work from the program, but no new initiatives are required. It's about executing the existing work and ensuring the improvements become embedded. We have encountered increased headwinds since the initiation of the plan, including inflation and VBP impacts, requiring deeper assessments into our cost structures. But we feel very good about the momentum we’ve built and see many of the initiatives delivering results.

Regarding phasing in China, we see a significant reduction in the negative impacts as we progress through the year, with a retreat from approximately 50% down to 10% or less expected by year-end. It's a positive trajectory and essential for our overall recovery.

Absolutely. So that was our last question. We appreciate all of the interest and questions. Just to summarize, we've had a great start to Q1, and we're set up well for continued delivery through 2025. I look forward to updating you as we progress through the year. Thank you very much.