Smiths Group increases 2014 interim dividend by 2%

DividendMax Ltd.

Smiths Group increases 2014 interim dividend by 2%

Highlights

Company-funded investment in new product development up 7% to £57m

Strong headline operating cash conversion at 86%

Dividend up 2%; reflecting continued strong cash generation

Strength in commercial markets offset by challenging healthcare and defence markets

John Crane and Flex-Tek report underlying revenue and margin growth

Medical generated strong cash; margin affected by volume, price pressure and device tax

New divisional medium-term operating ranges for revenue growth and margins

"We made good progress in our businesses that serve commercial customers, while those with significant government and healthcare exposure continued to face challenging trading conditions. Underlying revenue and margins advanced in John Crane and Flex-Tek but were primarily offset by declines in Smiths Medical.  Smiths Interconnect and Smiths Detection saw more modest reductions compared against strong prior periods.

"We continue to focus on operational improvements to support investment in both high growth markets and new products to accelerate medium-term revenue growth. We have outlined mid-term operating ranges for revenue growth and headline operating margin for each of the divisions. We also provide further details of our 'Fuel for Growth' programme scheduled to generate £60m of annual savings by 2017 to reinvest in growth initiatives.

"We anticipate improved underlying trading in the second half driven by a strong John Crane order book, some recovery in Smiths Interconnect and further growth in Flex-Tek. Smiths Detection will continue to be affected by government budget pressures. Smiths Medical is expected to continue to face tough trading. At current rates, foreign exchange headwinds will increase in the second half, with a 4-5% impact on full year earnings. We will maintain our focus on investing to drive sales growth in what are attractive long-term markets, and delivering further operational improvements, while providing strong cash conversion and returns."

Companies mentioned