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Smiths Group Strong results and resilient business model

Smiths Group plc (LON:SMIN) has today released its Interim Results for the half year ended 31 January 2020.

Strength & Resilience

·    Good growth that continued into the first 2 months of the second half.

·          Excellent cash conversion.

·          Strong balance sheet.

·          Increasing trend of weakening demand with the exception of Smiths Medical.

·          Resilient business model and actions in place to respond to market changes.

Smiths Continuing Operations: strong results

·    4th consecutive half of good growth with underlying revenue up +3%, and United Flexible acquisition adding a further 5% of growth. As a result, reported revenue increased +8%.

·    Strong profit growth across John Crane, Smiths Detection and Flex-Tek, held back by market weakness in Smiths Interconnect.

·    Excellent cash generation; 109% cash conversion.

Smiths Medical discontinued operations: excellent further progress

·    Another period of revenue and profit growth, both up +1% on an underlying basis.

·    As previously announced, separation delayed due to uncertain conditions.

·    A strong start to the second half with increasing demand for critical care products globally.

Financial strength

·    Free Cash Flow £132m, up 86%.

·    Net debt of £1.3bn (including leases) and  EBITDA (Continuing and Discontinued) of £699m; a ratio of 1.8x.

·    Issued debt has average maturity of 4.6 years, no maturities until October 2022 & no covenants.

·    Cash of c.£250m and undrawn RCF of c.£600m; total liquidity headroom in excess of £850m.

·    Based on credit rating, eligible for up to £600m in funding via the CCFF.

·    Pension plans well hedged, well funded and well invested.

COVID-19 update

·    In HY2020 only the Chinese operations of John Crane and Interconnect were disrupted.

·    Trading to the end of March was affected to some extent by early COVID-19 disruption; this is now accelerating with impact on both demand and supply in the near-term.

·    Resilient characteristics: capex-light, flexible cost base, significant aftermarket activity serving critical industries and strong cash generation.

·    Actions to reduce costs and protect cash in place.

Attractive strategic fundamentals

·    Well-positioned in long term, attractive growth markets.

·    Highly-differentiated, market-leading products and services.

·    Organic growth complemented by disciplined M&A.

·    World-class operational excellence.

·    A culture of innovation, entrepreneurship and relentless execution.

Statutory reporting

Statutory reporting takes account of all items excluded from headline performance. On a statutory basis, total Group profit for the half year was £145m (HY 2019: £121m) and basic earnings per share were 36.3p (HY 2019: 30.3p).

See accounting policies for an explanation of the presentation of results and note 3 to the financial statements for an analysis of non-headline items.


The following definitions are applied throughout the document:

1Headline: In addition to statutory reporting, the Group reports on a headline basis. Definitions of headline metrics, and information about the adjustments to statutory measures, are provided in note 3 to the financial statements.

2 HY 2019 has been restated for the reclassification of Smiths Medical as discontinued operations.

3 Underlying modifies headline performance to adjust prior year to reflect an equivalent period of ownership for divested businesses, excludes the effects of foreign exchange and acquisitions, and adds back the depreciation and amortisation of discontinued operations for comparability purposes.

4 Continuing operations exclude Smiths Medical which is accounted for as ‘discontinued operations – businesses held for distribution to owners’.

5 Discontinued operations are defined in note 17 to the financial statements.

Andy Reynolds Smith, Smiths Group Chief Executive, commented:

“We started the year strongly, delivering good growth and cash across the Group. This positive start has also continued during the first two months of the second half, demonstrating the quality and financial strength of our business.

Over the coming months, COVID-19 presents significant uncertainty and our number one priority is to keep our people safe and well. We enter this period confident in our resilience and preparedness; financially, operationally and strategically. We have clear plans underway to contain costs, flex our operations, maximise business continuity and conserve cash. This combined with the significant built-in resilience and our diverse critical end markets with long term structural drivers, will deliver the very best performance through this period and position us well for the future. I’m deeply grateful to our incredible people who are handling this terrible situation with real grit and determination in these challenging times.”

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