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22 September 2017


Good progress in executing our strategy for sustainable growth


  • Group underlying revenue broadly in line with prior year, up 11% on a reported basis
  • Underlying headline operating profit up 3%, and up 16% on a reported basis
  • Margin expansion in all divisions combined with increased investment.
  • Operational excellence supporting strong cash conversion of 118%
  • Significant portfolio upgrading
    • c.75% of the Group now well-positioned in growth markets
    • Increased investment in all divisions to drive future growth, up 60bps to 4.6% of sales
    • Four non-core businesses sold
    • Morpho Detection acquisition integration on track
  • Balance sheet remains strong with further investment capacity for sustainable growth
  • ROCE up 90bps with increases in all divisions
  • Headline basic EPS up 15% at 97.6 pence per share
  • Proposed final dividend of 29.70 pence per share. Full year dividend growth of 3%


Results for the year ended 31 July 2017

Continuing Operations
  Headline* Statutory
Reported growth Underlying# growth 2017
Revenue 3,280 2,949 11% (1)% 3,280 2,949
Operating profit 589 510 16% 3% 674 387
Operating margin 18.0% 17.3% 70bps   20.5% 13.1%
Pre-tax profit 528 451 17%   601 346
Free cash-flow 370 243 52%      
Return on capital employed 16.2% 15.3% 90bps      
Continuing basic EPS 97.6p 85.2p 15%   144.1p 65.6p
Dividend 43.25p 42.00p 3%      

*In addition to statutory reporting, Smiths Group reports its continuing operations on a headline basis. Definitions of headline metrics, and information about the adjustments to statutory measures are provided in the notes to the financial statements

#Underlying excludes the effects of foreign exchange translation and acquisitions but includes divested business for the period they were owned in the reported financial year and adjusts the prior financial year comparator as if the divested business were owned for the same period in that financial year to aid comparability


Andy Reynolds Smith, Group Chief Executive, commented:

“Smiths has made good progress this year as we continue to execute our strategy for sustainable growth. We are well underway in repositioning the business through organic and inorganic investment with approximately 75% of the Group now well positioned in attractive markets. The disposal of four non-core businesses and the acquisition of Morpho Detection has supported the significant upgrading of the portfolio as we increasingly focus on scalable, technology-differentiated leadership positions in our chosen markets.

Underlying revenue was broadly in line with the prior year, with growth across the portfolio offset by John Crane’s oil & gas business and in Smiths Medical due to market challenges in John Crane and a delay in some new product launches in Smiths Medical. The underlying quality of our businesses and the increasing impact of the Smiths Excellence System supported a strong operating profit performance.

We delivered margin expansion in all divisions while making increased, smarter investment in R&D and innovation. This has delivered a strong pipeline of new products due to be launched in FY2018 and beyond. Our relentless focus on operational efficiency and cash generation is delivering results with significant reductions in working capital and strong cash conversion supporting continued investment for growth.

The progress delivered in executing our strategy ensures that we’re well positioned for the Group to return to growth in FY2018. As in previous years, we expect Group performance to be weighted towards the second half. Growth in John Crane’s non-oil & gas business, as well as an increase in aftermarket is expected to more than offset the challenging market conditions in oil & gas. We expect the introduction of new products during the year to support a gradual improvement in Smiths Medical. In Smiths Detection we anticipate a strong second half driven by air transportation, which should generate good growth for the year as a whole. In Smiths Interconnect, our focus on fewer, higher-growth end markets is anticipated to support further good progress in this division. Flex-Tek is expected to deliver continued steady growth.

We’re confident that our focus on attractive growth markets, increasing investment in technology and new products, our established operating model for excellence and strong financial framework will deliver long-term sustainable growth and attractive returns.”

Statutory reporting
Statutory reporting takes account of all items excluded from headline performance. On a statutory basis, pre-tax profit from continuing operations was £601m (2016: £346m) and continuing basic earnings per share were 144.1p (2016: 65.6p).

See Accounting policies for an explanation of the presentation of results and note 3 to the accounts for an analysis of non-headline items.


To view the full press release please click here


Contact details

Investor enquiries
Jemma Spalton, Smiths Group
+44 (0)20 7004 1637
+44 (0)78 6739 0350

Marion Le Bot, Smiths Group
+44 (0)20 7004 1672
+44 (0)75 8315 4386

Media enquiries
Andrew Lorenz, FTI Consulting
+44 (0)20 3727 1323
+44 (0)77 7564 1807

Deborah Scott, FTI Consulting
+44 (0)203 727 1459
+44 (0)797 953 7449


The presentation slides and a live webcast of the analyst presentation will be available at at 09.00 (UK time) today. A recording of the webcast will be made available from 13.00 (UK time).

Original high-resolution photography and broadcast quality video is available to the media from the media contacts above or from

This document contains certain statements that are forward-looking statements. They appear in a number of places throughout this document and include statements regarding our intentions, beliefs or current expectations and those of our officers, directors and employees concerning, amongst other things, our results of operations, financial condition, liquidity, prospects, growth, strategies and the business we operate. By their nature, these statements involve uncertainty since future events and circumstances can cause results and developments to differ materially from those anticipated. The forward-looking statements reflect knowledge and information available at the date of preparation of this document and, unless otherwise required by applicable law, the Company undertakes no obligation to update or revise these forward-looking statements. Nothing in this document should be construed as a profit forecast. The Company and its directors accept no liability to third parties in respect of this document save as would arise under English law. This press release contains brands that are trademarks and are registered and/or otherwise protected in accordance with applicable law.


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