18th Sep 2013 07:25
LONDON (Alliance News) - Smiths Group PLC Wednesday reported higher profits and revenues for its most recent financial year as higher sales for its energy and aerospace businesses offset declines at its detection and healthcare units and exceptional items came in much lower than a year earlier.
Signalling its confidence and thanks to higher cash flow, the company also raised its final dividend and said it would return about GBP118 million more to shareholders through a special dividend.
The company reported a pretax profit of GBP442 million for the 12 months to end-July, up from GBP336 million a year earlier as revenues rose to GBP3.11 billion, from GBP3.03 billion. Excluding a large number of exceptional items including payments for litigation, restructuring costs, and profits on disposals of businesses, property and intellectual property, pretax profit was GBP498 million, up just slightly from GBP497 million a year earlier.
It raised its final dividend to 39.5 pence, from 38 pence, and said it would pay a special dividend of 30 pence.
The company has successfully increased its exposure to emerging markets and energy markets and reduced its reliance on government contracts, particularly defense and healthcare contracts, in recent years.
In a TV interview, Chief Executive Philip Bowman urged investors to be patient as it continued its strategy. He said the company is well placed to move forward in the new world economic situation of lower growth, but some of its products take a long time to get cleared for sale in a lot of emerging markets.
Each individual product has to get regulatory clearance in many emerging markets, he said, and healthcare products can take up to two years to be cleared in China, for example, he said.
Bowman blamed the failure of the sale of the company's healthcare business on an inability to come to the right terms with the potential buyer, and because news of the potential deal had leaked to the markets very early in the process, making it much harder to complete the process.
He said the healthcare business wasn't up for sale, and the unit's management is now fully focused once more on developing its strategy as part of Smiths Group, but the company would consider any new approach as part of a commitment to drive value for shareholders.
"Our priority is to continue to raise our investment in sales, marketing and new product development to generate medium to long-term value for our shareholders through sustainable growth," the CEO said in the statement. "We are funding this investment by delivering operational improvements and efficiencies with initiatives underway across all divisions."
Smiths Group had free cash flow of GBP237 million at the end of the financial year, up from GBP217 million a year earlier.
Smiths said it is currently evaluating some new medium-term targets and intends to publish these with its interim results in March 2014.
The company was the leading gainer on the FTSE 100 early Wednesday, up 1.7% at 1,400 pence.
By Steve McGrath; [email protected]; @SteveMcGrath1
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