Smiths Group plc (LON:SMIN), today announced interim results for the half year ended 31 January 2019
Highlights
· Delivering further good growth:
o Underlying revenue up 2% to £1,573m; up 3% excluding Smiths Medical. Reported revenue up 2% driven by good growth in John Crane, Flex-Tek and Smiths Interconnect.
· Focused on operational excellence:
o Underlying headline operating profit down (2)%; up 2% excluding Smiths Medical. Reported headline operating profit down (1)%, with favourable foreign exchange translation.
o The difference between headline and statutory operating are non-headline items as defined in note 3 to the accounts, of which the largest constituent is the Guaranteed Minimum Pensions (‘GMP’) equalisation.
· Strong financial framework:
o Continued strong balance sheet, net debt to EBITDA 1.5x.
o Cash conversion of 74%, temporarily impacted by inventory build for orders due for delivery in H2. Cash conversion is expected to be much stronger for the year overall.
· Further value creative investment:
o Continued investment for sustainable growth with cash R&D at 5.1% of sales (H1 2018: 4.6%).
o Further progress on portfolio optimisation:
§ Flex-Tek’s acquisition of United Flexible for $345m completed in February 2019.
§ Sold two non-core Smiths Medical businesses for a combined consideration of c.£30m.
· Plans announced for the separation of Smiths Medical, to create two stronger, industry-leading companies.
· FY2019 outlook reaffirmed.
Andy Reynolds Smith, Group Chief Executive, commented:
“Smiths delivered another good performance in the first half with sustainable growth driven by John Crane, Flex-Tek and Smiths Interconnect. The strong results from these divisions were partly offset by the anticipated decline in Smiths Medical and the timing of deliveries in Smiths Detection, with both on track to deliver growth in the second half.
Today we have announced our plans for the separation of Smiths Medical to create two stronger companies each focusing on accelerating the execution of their plans and maximising the opportunities in their respective markets.
We reaffirm our outlook for 2019. We expect to continue to deliver sustainable underlying revenue growth of at least 2%, underpinned by current trading of our four industrial technology divisions and by the increasing contribution from new product launches in Smiths Medical.”
