Smiths, the global technology company, will report its preliminary results for the year ended 31 July on Wednesday, 26 September. Ahead of that announcement, the company is providing the following update on trading in financial 2007.
Headline profit before tax for the continuing activities is expected to be some 7% ahead of the prior year level of £316m, benefiting from lower interest expense and improved pensions financing. Year-end net debt is expected to be below £600m.
With more than half of Smiths continuing activities based in North America, the decline in the average dollar/sterling exchange rate by 16 cents between 2006 and 2007 will impact reported sales and headline operating profit by some 6%. As a result, headline operating profit is expected to be at around the same level as the prior year’s £345m.
On an underlying basis, Detection and Specialty Engineering have generated good sales and profit growth, in line with management expectations. Sales in Medical have been held back by the operational factors disclosed at the interim stage, although margins have improved. With relocation to lower cost manufacturing centres now on plan and capacity constraints resolved, Medical’s output rates were closer to normal levels by the year-end.
The EGM seeking shareholder approval for the formation of Smiths GE Detection is likely to be held in the fourth quarter of calendar 2007.
Smiths expects to achieve underlying growth from all of its divisions in the new financial year, although reported growth will be held back by the recent further weakness of the US dollar.
The company will hold a conference call for analysts and investors at 10.00am this morning. The dial-in number is +44 (0)20 7019 0812, and the access code is Smiths. From 12.30pm, a recording of the call can be heard on +44 (0)20 7970 8402, and the access code is 2060. Extracts of the 2006 income statement for the continuing activities, which were published in the interim accounts, can be seen at http://www.smiths.com/ir.htm.