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23 September 2022

Smiths Group plc – full year results for 12 months ended 31 July 2022

A year of accelerating growth and stronger execution

Pioneers of progress – improving our world through smarter engineering

ACCELERATING GROWTH – +3.8% organic revenue growth, fastest in nearly a decade

  • Organic revenue growth ahead of expectations, +3.8%1 (H1: +3.4%; H2: +4.1%); 5 consecutive quarters of growth; reported growth of +6.7%
  • Headline2 EPS growth +17.8%
  • High demand across most end markets with strong order growth of +11%3
  • £51m of revenue from new products launched in FY2022; R&D investment increased +14%
  • Targeted M&A contributed +1.8% of reported growth
  • Increasing returns to shareholders with proposed total dividend of 39.6p, +5%

STRONGER EXECUTION – Smiths Excellence System fully embedded

  • Resilient operating margin of 16.3% with operating profit2 of £417m
  • Price offsetting inflation and mitigating other supply chain impacts
  • Solid operating cash conversion4 of 80%; investment in working capital and capex to support growth and mitigate supply chain impacts
  • More focused portfolio following completion of Smiths Medical sale and rapid return of proceeds with share buyback programme now 76% complete
  • Smiths Excellence System now fully embedded, with high impact projects underway and targeted savings actions to drive enhanced efficiency

INSPIRING & EMPOWERING OUR PEOPLE – an energised and focused team

  • A refreshed leadership team with new senior appointments throughout the year
  • Introduced Smiths Leadership Behaviours to build on our strong culture
  • Driving an even more dynamic and inclusive culture with greater focus on diversity
  • Continuing to translate our commitment to ESG leadership into action

STRONG BALANCE SHEET – well positioned to execute our growth strategy

  • £380m reduction in gross debt; leverage of 0.3x net debt/headline EBITDA4
  • Final buy-in of the TI Group Pension Scheme, delivering certainty for scheme members and shareholders

 

Headline2 FY2022 FY2021 Reported Organic1
Revenue £2,566m £2,406m +6.7% +3.8%
Operating profit £417m £372m +12.0% +1.7%
Operating profit margin4 16.3% 15.5% +80bps (30)bps
Basic EPS 69.8p 59.3p +17.8%  
Operating cash conversion4 80% 129% (49)%  
ROCE4,5 14.2% 13.9% +30bps  

 

Statutory FY2022 FY2021 Reported
Revenue £2,566m £2,406m +6.7%
Operating profit £117m £326m (64.1)%
Profit for the year (after tax) £1,035m £285m +263.2%
Basic EPS 267.1p 71.7p +272.5%
Dividend per share 39.6p 37.7p +5.0%

 

FY2023 Outlook

  • Expect to deliver 4.0-4.5% organic revenue growth with moderate margin improvement
  • Strong order books and leading market positions support sustained momentum
  • Cost inflation being actively managed through productivity programmes and pricing actions
  • Macroeconomic and geopolitical uncertainty as well as supply chain challenges continue

 

Paul Keel, Chief Executive Officer, commented:

“We continued to demonstrate strong progress in FY2022, executing at pace on our growth strategy. We delivered growth ahead of expectations, our fastest organic growth in nearly a decade. Along with accelerating growth, we further strengthened our company through increased investments in innovation, commercialisation and supply chain. Still more, we returned £661m of cash to our shareholders through dividends and share repurchases.

All of this gives us confidence for continued progress in FY2023. Despite an uncertain macro environment, we expect to deliver 4.0-4.5% organic revenue growth with moderate margin improvement. By focusing on our top priorities of growth, execution, and people, we are creating value for our customers, colleagues, communities and investors. Together, we’re building an ever-stronger future for Smiths.

Many thanks to my colleagues around the world for doing what we do best – improving our world through smarter engineering.”

 

Upcoming Events

Date Event
Wednesday 9 November 2022 Q1 Trading Update
Thursday 10 November 2022 Capital Markets Event
Wednesday 16 November 2022 Annual General Meeting

 

Statutory reporting

Statutory reporting takes account of all items excluded from headline performance.
See accounting policies for an explanation of the presentation of results and note 3 to the financial statements for an analysis of non-headline items.

Definitions

The following definitions are applied throughout the financial report:
1 Organic is headline adjusted to exclude the effects of foreign exchange, acquisitions and restructuring.
2 Headline: In addition to statutory reporting, the Group reports on a headline basis. Definitions of headline metrics, and information about the adjustments to statutory measures, are provided in note 3 to the financial statements. Headline performance is on a Smiths Group basis, excluding the results of Smiths Medical.
3 Order growth excludes the effects of foreign exchange and includes John Crane, Smiths Detection and Smiths Interconnect
4 Alternative Performance Measures (“APMs”) and Key Performance Indicators (“KPIs”) are defined in note 29 to the financial statements.
5 Excludes the impact of restructuring charges

 

View the full press release

 

Investor enquiries

Jemma Spalton, Smiths Group
+44 (0)7867 390350
jemma.spalton@smiths.com

Stephanie Heathers, Smiths Group
+44 (0)7584 113633
stephanie.heathers@smiths.com

Media enquiries

Alex Le May, FTI Consulting
+44 (0)7702 443312
smiths@fticonsulting.com

 

Presentation

The webcast presentation and Q&A will begin at 08.30 (UK time) today at:
https://smiths.com/investors/results-reports-and-presentations
A recording will be available from 13.00 (UK time).

 

Legal Entity Identifier (LEI): 213800MJL6IPZS3ASA11

 

This document contains certain statements that are forward-looking statements. They appear in a number of places throughout this document and include statements regarding the intentions, beliefs and/or current expectations of Smiths Group plc (the “Company”) and its subsidiaries (together, the “Group”) and those of their respective officers, directors and employees concerning, amongst other things, the results of operations, financial condition, liquidity, prospects, growth, strategies, and the businesses operated by the Group. 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. The Company and its directors accept no liability to third parties. This document contains brands that are trademarks and are registered and/or otherwise protected in accordance with applicable law.

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