Smiths Group PLC Trading Statement (2632X)
November 18 2014 - 2:00AM
UK Regulatory
TIDMSMIN
RNS Number : 2632X
Smiths Group PLC
18 November 2014
News Release
London, 18 November 2014
For immediate release
SMITHS GROUP PLC TRADING STATEMENT
Smiths Group Chairman, Sir George Buckley, will refer to the
following trading statement at the Company's Annual General Meeting
in London today.
Expectations for the year remain in line with the outlook given
at the full year results. Foreign exchange translation and
transaction are expected to have an adverse impact of c.3% on the
Group's first half headline operating profit. However, this
headwind is expected to reverse during the second half if current
exchange rates are maintained. More generally, as previously
guided, the Group's underlying performance will be weighted towards
the second half.
In the three months to 1 November 2014, underlying revenue and
headline operating profit at Smiths Group fell as expected against
the first quarter last year as growth in Smiths Medical was more
than offset by declines in Smiths Detection and Smiths
Interconnect. John Crane revenues and headline operating profit
were broadly similar to last year's first quarter. Headline
operating cash conversion was strong for the first quarter at
94%.
John Crane's aftermarket and first-fit rotating equipment
business delivered underlying growth in revenue and operating
profit in the quarter. This was offset by year-on-year declines in
the upstream energy services business resulting in overall John
Crane revenue and profit at a similar level to the same period last
year. While this upstream business has now stabilised on a
consecutive monthly basis, first quarter performance is still set
against a relatively stronger prior period. The John Crane order
book is expected to deliver revenue growth, although as guided at
the year end, the growth rate will be below the medium-term
operating range in the first half because of the headwinds in the
upstream business and some manufacturing constraints affecting the
aftermarket and first-fit rotating equipment business. These
factors should be resolved by the end of the first half and full
year margins are expected to be at the upper end of guidance. While
the order book remains at near record levels, we continue to
monitor the trading environment closely given wider concerns over
the outlook for oil and gas capex and lower oil prices.
Smiths Medical saw a further improvement in underlying revenue
growth driven by strong demand for infusion pumps and improving
performance in its vital care business, particularly its
respiratory and tracheostomy products. Headline operating profit
also increased with the higher volumes and the benefit of cost
saving initiatives despite the continued headwind from foreign
exchange transaction impacts. We expect to see continued growth in
revenue and headline operating profit in the first half and full
year results.
Smiths Detection still faces challenging trading conditions
across most of its markets reflecting continued constraints on
government spending. These resulted in lower underlying revenue and
headline operating profit in the first quarter. Our key priority
remains to reduce costs through ongoing site rationalisation, value
engineering and other productivity initiatives in order to improve
profitability and combat price pressure. As previously guided, the
outlook for the first half is for lower underlying revenues and
margins while the full year margins are expected to improve against
a weak comparator affected by one-off costs.
Smiths Interconnect saw declines in revenue and headline
operating profit at constant currencies as the year started more
slowly than expected. This reflects some spending delays by
wireless telecoms customers, the timing of certain orders for test
equipment with revenue benefiting the prior year and continued
softness in some end markets, particularly defence. First half
revenues and profitability are budgeted to be below last year.
However, the second half should see some recovery against the first
half reflecting normal seasonality in certain markets and the
timing of benefits from growth investments.
Flex-Tek reported a modest increase in underlying revenue. Sales
of automotive components drove growth in Fluid Management while
Heat Solutions benefited from increased sales of specialty heating
elements. The outlook for the full year remains positive and in
line with previous guidance.
At 1 November, net debt was GBP817m, slightly increased from the
GBP804m at 31 July 2014.
ENDS
This press release contains certain forward-looking statements
with respect to the operations, performance and financial condition
of the Group. By their nature, these statements involve uncertainty
since future events and circumstances can cause results and
developments to differ materially from those anticipated. The
forward-looking statements reflect knowledge and information
available at the date of preparation of the press release and the
Company undertakes no obligation to update these forward-looking
statements. Nothing in this press release should be construed as a
profit forecast.
Investor Relations
Peter Durman: +44 (0)20 7808 5535
Media Relations
Colin McSeveny: +44 (0)20 7808 5534
Anthony Cardew - Cardew Group: +44 (0)20 7930 0777
Smiths Group
Smiths is a global technology company listed on the London Stock
Exchange (SMIN) and operates a sponsored level one ADR programme
(SMGZY). A world leader in the practical application of advanced
technologies, Smiths Group delivers products and services for the
threat & contraband detection, medical devices, energy and
communications markets worldwide. Our products and services make
the world safer, healthier and more productive. Smiths Group
employs around 23,000 people in over 50 countries. For more
information visit www.smiths.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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