10th Aug 2006 07:00
Smiths Group PLC10 August 2006 Smiths Group: year-end trading update Smiths Group will announce its preliminary results for the 2006 financial yearon Wednesday, 27 September. At the start of its close period the company isproviding the following trading update in respect of its headline performancefor the year just ended. As forecast at the interim stage, the company has sustained its pace of growththrough the second half of the year, benefiting from a good operatingperformance across its activities and a background of generally favourablemarket conditions. For the full year, sales are expected to be approximately 17% higher than in2005, of which half will be from underlying growth. Headline operating profitis expected to have grown at a faster rate, resulting in an improvement in thenet operating margin of more than half a per cent. The company is alsoexpecting a strong cash-flow from operations this year. While interest expensewill be higher than a year ago, it is anticipated that the increase will belargely offset by an improved pensions financing position. The company's taxrate on headline profit should be unchanged. While the US dollar weakenedtowards the end of the year, currency translation overall has been beneficial in2006. Headline PBT and EPS are expected to be well ahead of 2005 and to be inline with analysts' forecasts for 2006*. At the divisional level, underlying sales and profits are expected to show acontinuing improvement in all four businesses. Aerospace sales have grownstrongly, although the margin in this division is expected to have remainedsteady due to an increase in R&D expense. Looking ahead, with a robust market outlook for each of its sectors, Smithsexpects good underlying sales growth in 2007. Higher volumes, productivitygains and lower R&D expense will provide the opportunity for further operatingmargin improvement. At the same time, interest rates have risen and the USdollar is currently significantly weaker than the average rate for 2006.Overall, the company expects to make further progress in the year justcommenced. -o- Media: Chris Fox Investors: Russell Plumley+44 (0) 20 8457 8403 +44 (0) 20 8457 [email protected] [email protected] * Note to Editors: On a Smiths headline results basis, the consensus ofanalysts' forecasts is approximately £485 - 490m for 2006 PBT and 63.4 - 64.1pfor 2006 EPS. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Smiths Group