19th Mar 2014 08:11
LONDON (Alliance News) - Smiths Group PLC Wednesday raised its interim dividend and announced the expansion of its investment programme 'Fuel For Growth', although pretax profit declined as the company's Medical and Defence businesses weighed on results.
The technology and engineering company posted a dividend of 12.75 pence, up from 12.50 pence in the previous year.
Pretax profit declined to GBP132 million from GBP166 million, as revenue slipped to GBP1.44 billion from GBP1.48 billion in the previous year, largely due to the Medical and Defence businesses.
Smiths also posted GBP83 million of exceptional charges, up from GBP57 million in exceptional charges in the previous year, primarily as a result of restructuring costs and a GBP36 million charge in relation to an asbestos litigation.
In Smiths Medical, revenue declined to GBP389 million from GBP413 million, hit by soft trading conditions in the developed-market medical devices sector and by an adverse currency translation impact of GBP9 million. In the US sales weakened, particularly in the last six months as de-stocking accelerated, the company said. Smiths also noted that the division was distracted by an approach last year to acquire the business.
Revenues in Smiths Detection declined to GBP251 million from GBP255 million as growth in critical infrastructure was offset by weakness in transportation, military, ports and borders and emergency responders.
The company also announced the expansion of its 'Fuel for Growth' programme. The programme is now expected to deliver GBP60 million in yearly cost savings, and cost GBP120 million by the end of 2017. Previously, the programme had been expected to produce savings of GBP50 million at a cost of GBP100 million.
For the second half, the company expects improved underlying trading driven by a strong order book in its John Crane business, some recovery in Smiths Interconnect and further growth in Flex-Tek. However, Smiths remained bearish on the outlook for its Medical and Detection business, saying it expects Detection to continue to be hampered by government budget pressures and Medical to continue facing tough trading conditions.
Smiths also noted that foreign exchange headwinds will increase in the second half, having a 4% to 5% impact on its full year earnings.
Shares in Smiths were trading down 5.5% at 1,276.00 pence Wednesday morning, the biggest faller in the FTSE 100.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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