Good First-Half Progress at Smiths Group


LONDON -- The share price of Smiths Group -- the global technology company that specializes in the practical application of advanced technologies in contraband and threat detection, medical devices, energy, communications and engineered components -- published its interim results for the six months ending Jan. 31, reporting good progress across all its businesses.

Underlying headline revenue was up 6% at 1.5 billion pounds, driven by growth across all of the group's divisions. Revenue in emerging markets, which now account for 15% of the group's revenue, rose 9%. Underlying operating profit was reported up 5% to 253 million pounds, with underlying pre-tax profit growing 6% to 223 million pounds.

Basic earnings per share were up, but only by 1% to 40 pence. Even so, the board has recommended that the interim dividend be increased by 6% to 12.5 pence per share to reflect the company's strong operating cash conversion. Smiths Group now stands on a yield of just more than 3%.

Commenting on the results, chief executive Philip Bowman said:

Smiths Group has continued to make good progress with underlying revenue growth across all its businesses. Headline margins rose in all divisions except Smiths Medical where, as part of our growth strategy, we have significantly increased our investment in sales and marketing in emerging markets and new product development. We delivered improved cash conversion and return on capital against last year.

Our priority is driving operational improvements and efficiencies across our businesses while increasing our investment in high growth markets and new product development to accelerate medium-term revenue growth.

Looking to the second half, we see tough trading conditions as a result of the U.S. medical device tax, slower demand in some parts of John Crane, and the impact of further government budget cuts. However, despite these challenges, there remain significant opportunities to generate value for shareholders over the medium term. We will continue to focus on investing to drive sales growth, and delivering further operational improvements, while maintaining strong cash conversion and improved returns.

Smiths Group's share price has risen nearly 27% on this time last year, with practically all of that growth coming in the last six months, and the increased dividend will come as a nice bonus for shareholders.

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