Smiths Group plc - Interim Results for the half year ended 31 January 2021
Robust first half performance with improving trends
- Robust performance despite market disruption
- Underpinned by our market-leading positions and high proportion of aftermarket revenues
- Good profit conversion and excellent cash generation
- Group-wide operating model driving efficiency, innovation and consistent execution
- Strategic restructuring on track to deliver full £70m annualised benefit from FY2022
- Further portfolio strengthening for long-term value creation
- Continued investment in new technologies
- Flex-Tek acquisition of Royal Metal in February 2021
- Smiths Group of the future - aligned to long-term trends of sustainability and digitisation
- All businesses united by the shared purpose of making a safer, cleaner and more efficient world
- Smiths Medical - continuing to strengthen ahead of separation in Q4 FY2021
- Finalising key separation workstreams
|Reported growth||Underlying growth2||HY 2021
|Smiths continuing operations3|
|Smiths Medical - discontinued operations3|
|Profit after tax||67||70||(4)%||+5%||107||133||(20)%|
|Profit for the half year||171||187||(9)%||(3)%||129||145||(11)%|
The differences between headline and statutory operating profit are non-headline items as defined in note 3 to the condensed financial statements, of which the largest constituents are the amortisation of acquired intangibles, cost recovery for asbestos litigation in John Crane, Inc and subrogation claims in Titeflex Corporation.
- Improving H2 trends
- Restructuring benefits supporting further good profit conversion
- Continued strong cash generation
- Dividend increase reflects our confidence in the medium and longer term prospects
- Subject to continued market recovery, Group is confident of meeting market expectations for the full year
Andy Reynolds Smith, Group Chief Executive, commented:
“This is a robust set of results relative to our end markets, with a resilient top line, good profit conversion and excellent cash generation. This has been delivered by our exceptional people in very challenging circumstances and my sincere thanks go to them. We have continued to position Smiths in the very best way - strategically, operationally, and financially - to enable us to take full advantage of market recovery when it comes.
The Group is united by the shared purpose of making a safer, cleaner and more efficient world. The accelerating global trends of sustainability and digitisation play to the core strengths and capabilities of Smiths’ existing business model. We continue to enhance the positioning of the Group for outperformance through targeted investment in innovation and disciplined transactions - including the planned separation of Smiths Medical by the end of FY2021, which will focus and simplify the Group and maximise value for all stakeholders.
Whilst economic uncertainty remains, against the backdrop of our robust first half performance and the improving second half trends, the Group is confident of meeting market expectations for the full year and delivering long-term sustainable value.”
Statutory reporting takes account of all items excluded from headline performance. On a statutory basis, total Group profit for the half year was £129m (HY 2020: £145m) and basic earnings per share were 32.3p (HY 2020: 36.3p).
See accounting policies for an explanation of the presentation of results and note 3 to the condensed financial statements for an analysis of non-headline5 items.
The following definitions are applied throughout the financial report and are Alternative Performance Measures (APMs) as defined in note 19 to the condensed financial statements:
1 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 condensed financial statements.
2 Underlying modifies headline performance to adjust prior year to reflect an equivalent period of ownership for divested businesses, exclude the effects of foreign exchange, acquisitions, restructuring costs and write-downs, and include depreciation and amortisation of discontinued operations for comparability purposes.
3 Continuing operations exclude Smiths Medical which is accounted for as ‘Discontinued operations – businesses held for distribution to owners’. Discontinued operations are defined in note 17 to the condensed financial statements.
4 Total Group comprises continuing operations and discontinued operations.
5 APMs are defined in note 19 to the condensed financial statements.
6 HY 2020 dividend was declared in September 2020 as part of the full year announcement.
Jemma Spalton, Smiths Group
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Richard Mountain, FTI Consulting
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Alex Le May, FTI Consulting
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The management presentation via webcast will begin at 09.00 (UK time) today at https://smiths.com/investors/results-reports-and-presentations, with a recording available from 13.00 (UK time).
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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. Nothing in this document should be construed as a profit forecast. 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.