17th Sep 2014 07:02
LONDON (Alliance News) - Smiths Group PLC raised its dividend for the full year to end-July, although it saw results hit by the strength of sterling as growth in its John Crane, Smiths Interconnect and Flex-Tek businesses were offset by declines in Smiths Medical and Smiths Detection.
The technology group proposed a total dividend of 40.25 pence, up from 39.5 pence in the previous year.
Smiths posted a pretax profit of GBP302.0 million in the recent financial year, up from GBP395.7 million the year before, as revenue fell to GBP2.95 billion from GBP3.11 billion and as it posted higher exceptional and amortisation charges of GBP126.8 million, compared to GBP73.2 million a year before.
These exceptional costs included a GBP28.8 million charge related to restructuring, and litigation provisions related to its Titeflex Corp and John Crane businesses.
Stripping out these exceptional costs, Smiths posted an operating profit of GBP504.4 million, down from GBP559.7 million.
Smiths said that the strength of sterling had "significantly reduced" its results, estimating a GBP43 million hit to its operating profit.
In the company's John Crane business, operating profit was up 2% at constant currency, boosted by the reopening of dormant refineries on North America's East Coast, and customer investments in shale development. Going forward, the company expects John Crane's high order book to support sales growth in the first half of 2015, although it expects revenue growth to be below its medium-term operating range as market conditions to remain challenging.
Smiths Medical saw profit fall 16% on a constant currency basis, as revenue was hit by US distributor destocking, under performance in emerging markets and tough trading in developed markets. The company expects these conditions to remain challenging in the medium term, although it expects the launch of new products into its infusion range in China in 2015 to improve its competitiveness.
Smiths Detection saw revenue fall 5% at constant currency, as demand weakened in the transportation, ports and borders and military markets. The order book in this division is similar to the previous year, and it is expected to deliver flat revenues in the coming year as government capital spending remains constrained.
The company remains cautious regarding the healthcare, homeland security and defence markets as they are subject to government funding constraints, although it noted that "there are signs that the defence market is beginning to stabilise."
Going forward, the company said its strategy remains accelerating its medium-term growth, and repositioning its business through investment from its 'Fuel for Growth' programme, which is planned to produce GBP60 million in annual savings by 2017.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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