23rd Sep 2015 06:25
LONDON (Alliance News) - FTSE 100 engineer Smiths Group PLC on Wednesday said an improvement in margins helped its profit to edge higher in the year to the end of July, despite revenue falling, though it said its results for the current financial year will be more second-half weighed than normal.
The company, which has operations spanning energy services, medical devices and security sensors, said its pretax profit for the year was up to GBP459.0 million from GBP445.0 million a year earlier. The increase in profit was driven by a better operating margin in the year, up to 17.6% from 17.1%, which offset a 2% decline in revenue to GBP2.90 billion from GBP2.95 billion.
The group said its Smiths Medical business delivered its highest revenue growth in more than a decade, while its John Crane energy services unit proved resilient, as challenges posed by the tough conditions in the oil and gas market were offset by its high exposure to aftermarket services in its revenue mix.
Smiths Interconnect, its electronic components business, had a difficult year, but the Smiths Detection business managed to improve margins and end the year with a stronger order book. Flex-Tek, its engineering components unit, had a good year.
Smiths will pay a final dividend of 28.0 pence per share, meaning its total dividend increases by 2% to 41.0 pence.
"Looking ahead, our investment initiatives are building a solid foundation to accelerate medium-term revenue growth," said Philip Bowman, who will leave the company at the end of this week to be replaced by Andrew Reynolds Smith.
Bowman said the company said its sees strong performances coming from its Medical, Detection and Flex-Tek businesses, but said John Crane is likely to face further pressure from the cuts to spending plans in the oil and gas industry. As a result of this, the phasing of the group's results in the 2016 financial year is likely to be more weighted to the second half than is traditionally the case, he said.
By Sam Unsted; [email protected]; @SamUAtAlliance
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