21st May 2015 06:39
LONDON (Alliance News) - Smiths Group PLC Thursday said its outlook for the current financial year remains unchanged, as its underlying revenue and headline operating profit fell slightly year-on-year in the nine months to May 2.
The engineering company, which has divisions for threat and contraband detection, medical devices, energy, communications and engineered components said the slight fall in revenue and profit reflects continued like-for-like revenue growth in Smiths Medical and its Flex-Tek unit which are being offset by declines in Smiths Detection, Smiths Interconnect and John Crane.
However, it said headline operating profit cash conversion is strong at 96% in the financial year to date.
When the company put out its half-year results in March, it had said it expected an improved performance in the second half of the financial year excluding any impact from foreign exchange movements.
It said trading at John Crane is being hit by the difficult market conditions in some parts of the energy market, and while revenue is expected to decline modestly in the year as a whole, cost savings and favourable product mix should support margins.
Smiths Medical is expected to report revenue growth for the year, although the growth rate will be slower than in the first half of the year.
Smiths Detection full-year revenue is also expected to be below last year, but it expects headline operating margins to improve as it makes good progress in improving the business and cutting costs.
Underlying revenue in Smiths Interconnect fell in the third quarter of the financial year as customers in wireless telecoms continued to delay spending and it reported weakness in the defence and medical markets, somewhat offset by growth in data centres. It expects some improvement in trading in the fourth quarter, but full year revenue and headline operating profit will remain below last year's levels.
Flex-Tek reported a sustained improvement in underlying revenue and headline operating profit, with revenue growth driven by continued progress in heat solutions and construction revenues offsetting some weakness in Flexible Solutions. "The outlook for the full year remains positive and in line with previous guidance," it said.
Smiths also said net debt stood at GBP915 million as of May 2, slightly down from GBP929 million at the end of January.
By Steve McGrath; [email protected]; @stevemcgrath1
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