Underlying revenue growth driven by Smiths Medical, Flex-Tek and John Crane
Strong growth at Smiths Medical reflecting recent investment in infusion pumps
John Crane delivered a resilient performance reflecting aftermarket strength
Performance at Smiths Detection starting to stabilise as a result of initiatives
Smiths Interconnect faces tough trading conditions; Flex-Tek performed well
Headline operating margin lower with pressure in Detection and Interconnect
Strong headline operating cash conversion at 88%; dividend up 2%
"Smiths Group delivered underlying revenue growth. Improvements at Smiths Medical, John Crane and Flex-Tek more than offset revenue declines at Smiths Detection and Smiths Interconnect where tough trading conditions persist. The reported results were held back by adverse foreign exchange.
"We remain focused on repositioning the business to accelerate medium-term revenue growth and have launched a new cross-divisional programme to add further momentum. 'Engineered for Growth' has four workstreams: sales and marketing effectiveness; bringing new products to market faster through innovation; quality improvement; and increasing our presence in China. Our growth investment is funded by ongoing operational improvements and our 'Fuel for Growth' programme, which is on track to generate £60m of annual savings by 2017.
"We expect to deliver improved underlying performance in the second half. Smiths Detection will benefit from a prior year comparator affected by one-off charges. John Crane is expected to see a slight easing in trading as upstream customers adjust their expenditure to the lower oil price and as some projects may be deferred. The growth rate at Smiths Medical will slow versus the strong first half performance. Seasonality will bias performance at Smiths Interconnect to the second half but trading in the second half will remain below last year's levels. Flex-Tek should continue to perform well. We are focused on investing to drive sales growth in what are attractive long-term markets, and on delivering further operational improvements, while generating strong cash conversion and returns."
