22nd Mar 2019 07:43
LONDON (Alliance News) - FTSE 100-listed engineering firm Smiths Group PLC boosted its interim dividend Friday despite lower profit, as it outlined plans to spin-out its struggling medical unit by the end of 2020.
For the six months ended January, pretax profit narrowed 13% to GBP174 million from GBP200 million the year prior. This was despite revenue rising 2.0% to GBP1.57 billion from GBP1.54 billion the year before.
Profit performance was hurt by a rise in exceptional costs to GBP42 million from GBP18 million the year prior. This was primarily due to GBP29 million in one-off additional pension costs.
Headline pretax profit - excluding exceptional costs - was broadly flat, down 0.9% at GBP216 million from GBP218 million the year prior.
"Smiths delivered another good performance in the first half with sustainable growth driven by John Crane, Flex-Tek and Smiths Interconnect," Smiths Chief Executive Officer Adam Reynolds Smith said. "The strong results from these divisions were partly offset by the anticipated decline in Smiths Medical and the timing of deliveries in Smiths Detection, with both on track to deliver growth in the second half."
Also Friday, Smiths set out plans to demerge its Smiths Medical business and separately list it in the UK, with the process expected to complete in the second half of 2020. The firm has already began searching for a Smiths Medical CEO and "does not foresee any potential roadblocks in executing the demerger".
This follows the company's announcement back in November that it planned to separate Smiths Medical - which manufactures patient monitoring, ventilation and respiratory products - after the medical unit struggled to find growth. During the interim period, Smiths Medical - which generates around 27% of total group revenue - reported underlying revenue down 2% and underlying operating profit down 12%.
"Today we have announced our plans for the separation of Smiths Medical to create two stronger companies each focusing on accelerating the execution of their plans and maximising the opportunities in their respective markets," Reynolds Smith said.
Smiths proposed a 14.1 pence per share interim dividend, up 2.2% from 13.8p the year prior.
"We reaffirm our outlook for 2019," Reynolds Smith continued. "We expect to continue to deliver sustainable underlying revenue growth of at least 2%, underpinned by current trading of our four industrial technology divisions and by the increasing contribution from new product launches in Smiths Medical."
Related Shares:
Smiths Group