Smiths Group PLC (LON:SMIN) has announced its half year results for 6 months ended 31 January 2024.
· Solid first half performance with good momentum for the second half
o Organic revenue growth1 of +3.9% against record comparator, led by strong growth at
John Crane +12.7% and Smiths Detection +8.9%
o Revenue declines at Flex-Tek of (4.1)% and Smiths Interconnect of (13.7)%; with improved performance in the second quarter in both divisions
o Group orders2 up +16.5%, driven by John Crane +10.9%, Smiths Detection +38.2% and Flex-Tek aerospace +11.6%; double-digit order growth at Smiths Interconnect in Q2, following a
double-digit decline in Q1
· Commercial wins underpinning full-year guidance and future growth
o Continued improvement in demand for John Crane’s solutions supporting energy security and energy transition, including wins across carbon capture, blue hydrogen and battery manufacturing
o Smiths Detection secures multiple next-generation CTiX platform contracts globally; an award from the US DOD to supply portable aerosol and vapour chemical detectors and an initial £88m contract with the UK MoD to provide chemical detection technology
· Execution focus driving performance improvements; SES delivering further tangible benefits
o Headline organic operating profit3 +5.3%; headline operating margin3 expansion of +20bps to 16.3%, alongside reinvestment for growth
o ROCE4 up +50bps to 15.7%, driven by the profit improvement
o SES benefit of £10m; on track for full-year contribution of £20m
o Cash conversion4 up 26 percentage points year-on-year to 89%, resulting from working capital improvement; free cash-flow more than doubled to £112m
· Strong balance sheet supports investment in organic and inorganic growth
o Net debt to EBITDA4 of 0.9x
o Acquisition of Heating & Cooling Products for <7x EBITDA; integration progressing ahead of plan
o Interim dividend of 13.55p, up 5.0%
o New £100m share buyback programme announced, with first tranche of up to £50m to be completed by the end of September 2024
· Roland Carter appointed as the Group’s Chief Executive Officer, with immediate effect, following Paul Keel’s decision to step down to take on a new role as chief executive of a US public company
FY2024 Outlook
· Reaffirming FY2024 organic revenue growth within our medium-term target range of 4-6%, with continued margin expansion
| Headline3 | HY2024 | HY2023 | Reported | Organic1 |
| Revenue | £1,507m | £1,497m | +0.7% | +3.9% |
| Operating profit | £246m | £241m | +2.1% | +5.3% |
| Operating profit margin4 | 16.3% | 16.1% | +20bps | +20bps |
| Basic EPS | 48.7p | 46.6p | +4.5% | |
| ROCE4 | 15.7% | 15.2% | +50bps | |
| Operating cash conversion4 | 89% | 63% | +26pps |
| Statutory | HY2024 | HY2023 | Reported |
| Revenue | £1,507m | £1,497m | +0.7% |
| Operating profit | £192m | £187m | +2.7% |
| Profit for the half year (after tax) | £111m | £109m | +1.8% |
| Basic EPS | 32.0p | 30.6p | +4.6% |
| Dividend per share | 13.55p | 12.9p | +5.0% |
Paul Keel, Chief Executive Officer, commented:
“We are off to a good start in FY24 with +3.9% organic revenue growth and +16.5% order growth in the first half, against a record comparator last year, and marking our 11th consecutive quarter of revenue growth.
“We continue to focus on innovation as an enduring driver of value, as highlighted through the roll-out of our next-generation threat detection technology in airports around the world. We also continue to strengthen our energy transition impact, with significant project wins in carbon capture, blue hydrogen and electric battery manufacturing.
“We expect growth to improve in the second half, driven by a record order book for Smiths Group, continued strength in end markets like aerospace, security and energy, as well as gradually improving conditions in the industrial segments that were softer in the first half. Together, this gives us confidence in reaffirming our
full-year 2024 guidance of 4-6% organic revenue growth, with continued margin expansion.“As we continually advance our Purpose of improving our world through smarter engineering, we are pleased to announce that the Smiths Group Foundation is now awarding its first set of grants to charities which are aligned with our Purpose.
“Thank you to my colleagues around the world for all you do. It has been a tremendous honour to have led this wonderful company over the past three years, working alongside our many talented employees, and I am proud of everything we have achieved together. I’m excited for what lies ahead for Smiths and to see Roland continue to build on its successes and deliver further value for all Smiths Group’s stakeholders.”
UPCOMING EVENTS
| Date | Event |
| 21 May 2024 | Q3 Trading Update |
| 24 September 2024 | FY2024 Full Year Results |
| 13 November 2024 | Q1 Trading Update and 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 and acquisitions.
2 Order intake growth excludes the effects of foreign exchange.
3 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.
4 Alternative Performance Measures (“APMs”) and Key Performance Indicators (“KPIs”) are defined in note 19 to the financial statements.
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).
