Smiths Group plc (LON:SMIN) has provided a pre-close trading update for the six months ending 31 January 2023, and raises FY2023 guidance.
As set out in the November trading update, Smiths delivered 13.2% organic revenue growth1 in the first quarter. Strong growth continues in the second quarter, and the Group now expects to deliver low double-digit organic revenue growth for the first half through a combination of volume growth and price increases to offset cost inflation. To support this growth and to mitigate supply chain impacts, the Group continues to invest in working capital.
While uncertainty remains high, and supply chain impacts persist, growth continues across all businesses:
· John Crane is ramping supply to service strong demand, and this has supported accelerated growth in both Energy and Industrials in the second quarter.
· Smiths Detection continues to execute against its order book and is expected to deliver strong growth in the first half, having benefited from a very strong first quarter.
· Flex-Tek’s strong growth continues in both aerospace and construction, although in line with macro-economic forecasts, we expect the latter to slow in the second half.
· Smiths Interconnect continues to deliver growth albeit below the double-digit levels of last year.
Reflecting current momentum, Smiths is updating FY2023 guidance. We now expect organic revenue growth for the full year to be at least 7%, with moderate margin improvement.
Paul Keel, Group Chief Executive, commented:
“Our strategy of focusing on accelerating growth, improving execution and investing in our people continues to deliver increased value for all stakeholders. I credit our teams around the world for making this progress possible and I look forward to providing further details when we share our first half results on 24 March.”
Share buyback
As at 17 January, we have returned £647m of the £742m share buyback programme which was announced on 11 November 2021. At the current run-rate and share price, the programme is now expected to complete by the end of FY2023.
HY2023 results
Smiths Group will publish its results for the six months ending 31 January 2023 on Friday, 24 March 2023.
1 Organic revenue growth excludes M&A and the effects of foreign exchange.
