Smiths Group issued its annual results for the year ended July 31, 2015. Headline EPS was up 5% and continued strong headline operating cash conversion at 95%. Smiths Medical delivered highest revenue growth in almost a decade.
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John Crane
Revenue down 2% driven mainly by weaker demand from first-fit customers. Aftermarket for rotating equipment resilient with revenue up 4%.
Margins broadly maintained at 24.8% benefiting from product mix and continued focus on cost controls. Absent any market improvement, revenue likely to decline on weaker first-fit demand despite aftermarket resilience.
Smiths Medical
Revenue up 4% due to strong ambulatory infusion performance and recovery in disposables. Margins maintained with higher volumes and efficiencies and despite increased investment and price pressure.
Strong emerging market performance led by much improved results in key markets such as China. Revenue growth expected to moderate after strong infusion year; margins likely to improve despite investment.
Smiths Detection
Revenue down 7% with tough trading and a variable contract flow; but good progress on stabilising operations. Margins up 710 bps as last year’s £30m of one-off charges were not repeated and helped by efficiency gains.
Recent contract wins have strengthened order book for delivery in FY16. Margins are expected to continue to benefit from cost saving actions despite price and mix pressures.
Smiths Interconnect
Revenue 9% lower with continued pressures across Microwave and Connectors offsetting growth in Power. Margins down 440 basis points on lower volumes, adverse operational gearing and adverse mix. Market conditions expected to improve slightly enabling a modest performance improvement next year.
Flex-Tek
Revenue up 4% driven by US residential construction, specialty heating elements and aero/automotive hoses. Margins down 40 bps reflecting increased investment in new product development and adverse product mix. US construction and aerospace demand supports growth; margin outlook stable despite increased investment. ■