The company, Europe’s largest maker of artificial hips and knees, reported a trading profit nine per cent down in the three months to 1 October.
The group blamed the disappointing figure on the state of the orthopaedics market.
Patients are postponing elective procedures due to worries about job losses.
Chief executive Olivier Bohuon said: "We are taking the steps necessary to reduce a cost base in orthopaedics that is too high for on-going market conditions.
"I expect to see material improvements from quarter four onwards."
The group also has endoscopy and advanced wound management units which grew at six and seven per cent respectively.
Overall revenue was up 10 per cent to $1,032m (£644.89m), with underlying growth of five per cent.
Analyst Mike Mitchell at Seymour Pierce warned that the orthopaedics business is likely to hold the firm back.
Smith & Nephew reported growth of just three per cent in orthopaedics revenue and a dip of two per cent in its hip business.
The figures are in the line with those reported by rivals in the industry.
"We expect the stock to come under pressure while the market assesses the ability of the recently-arrived chief executive to address near-term costs," Mitchell said.
Bohoun took over in April.