Smiths Group PLC SMIN Interim Management Statement

  Smiths Group PLC (SMIN) - Interim Management Statement

RNS Number : 5833R
Smiths Group PLC
20 November 2012




News Release

London, 20 November 2012

For immediate release



                                      

SMITHS GROUP PLC INTERIM MANAGEMENT STATEMENT



Smiths Group  Chairman Donald  Brydon made  the following  Interim  Management 
Statement at the Company's Annual General Meeting in London today.



In the three  months to  3 November 2012,  Smiths Group  has grown  underlying 
revenue across all divisions. Underlying  headline operating profit for  the 
Group was  also ahead  of  the same  period last  year  with progress  in  all 
divisions except  Smiths Medical  which, as  previously guided,  substantially 
increased investment  in sales  and marketing  in higher  growth markets.  The 
impact of foreign exchange  translation represented a  slight headwind to  the 
level of profit  growth. Overall, expectations  for the year  remain in  line 
with guidance given at the full year results, as announced in September.



John Crane delivered sustained underlying revenue growth in the first quarter,
continuing the same  trend as  the second half  of last  year. This  reflected 
on-going  demand  for  its   first-fit  original  equipment  and   aftermarket 
services. Operating profit also rose, despite increased investment in  growth 
drivers such as  sales and marketing  and a weaker  performance from the  John 
Crane Production Solutions business. We have  expanded the order book in  the 
quarter with a  positive book-to-bill ratio  and we expect  to sustain  modest 
revenue growth into the front end of the second half. Beyond that, we  remain 
cautious as some of our customers have signalled concerns about the  potential 
impact on their capital expenditure from any further economic slowdown.



Smiths Medical grew underlying revenue with demand for single-use  consumables 
more than offsetting  a slight weakness  in hardware sales  compared with  the 
same period last year.  As anticipated, headline  operating profit is  lower, 
reflecting the  annualised effect  of our  increased investment  in sales  and 
marketing in emerging markets  which was weighted towards  the second half  of 
last year.  Looking to  the balance  of  the year,  the introduction  of  the 
medical device tax in the  US in January is  expected to constrain growth  and 
margins.  We  will   seek  to  offset   these  impacts  through   operational 
improvements and a continuing focus on higher margin products.



Revenue and headline  operating profit  have shown  underlying improvement  at 
Smiths Detection. The performance improvement programme continues to  deliver 
cost  savings  and  we  have  completed  the  first  shipments  from  our  new 
manufacturing facility  in  Malaysia.  Looking  ahead,  the  order  book  has 
continued to grow significantly compared to previous years and is expected  to 
support increased revenue for the  full year. However, as previously  guided, 
overall performance may  be affected  by the  level and  timing of  government 
spending.



Smiths Interconnect  delivered  underlying  growth  in  revenue  and  headline 
operating margin, albeit against a  weaker comparator period. Revenue rose  on 
the back of improvements in  connectors and microwave, while power  management 
experienced continuing underlying declines. As previously guided, the outlook
for the rest  of the year  remains challenging, given  the uncertain  economic 
outlook and the risk of US defence budget cuts.



Flex-Tek has started the year well. Underlying revenue growth was driven by a
strong performance in  aerospace and US  residential construction. Given  the 
division's high  operational gearing,  headline operating  profit and  margins 
improved significantly as a result of the higher volumes. The outlook for the
full year  remains  positive  driven  by the  aerospace  order  book  and  the 
improving trend for US housing.



At 3 November, net debt was slightly  higher at £802m. In October, the  Group 
successfully completed a $400m bond issue, with a 10-year maturity and  priced 
at a fixed coupon of 3.625%.



ENDS

This press release contains certain forward-looking statements with respect to
the operations, performance  and financial  condition of the  Group. By  their 
nature,  these  statements  involve   uncertainty  since  future  events   and 
circumstances can cause  results and  developments to  differ materially  from 
those  anticipated.  The  forward-looking  statements  reflect  knowledge  and 
information available at the date of preparation of the press release and  the 
Company undertakes no obligation  to update these forward-looking  statements. 
Nothing in this press release should be construed as a profit forecast.







Investor Relations

Peter Durman: +44 (0)20 7808 5535



Media Relations

Colin McSeveny: +44 (0)20 7808 5534



Anthony Cardew - Cardew Group: +44 (0)20 7930 0777



Smiths Group

Smiths is a  global technology  company listed  on the  London Stock  Exchange 
(SMIN) and  operates a  sponsored level  one ADR  programme (SMGZY).  A  world 
leader in the  practical application  of advanced  technologies, Smiths  Group 
delivers products and services for the threat & contraband detection,  medical 
devices,  energy  and  communications  markets  worldwide.  Our  products  and 
services make the  world safer,  healthier and more  productive. Smiths  Group 
employs around 23,000 people in over 50 countries. For more information  visit 
www.smiths.com

                     This information is provided by RNS
           The company news service from the London Stock Exchange

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