Sept. 18 (Bloomberg) -- Smiths Group Plc had the second-biggest gain among stocks on the FTSE 100 index today after the British maker of security scanners announced a special dividend and more plans to reduce costs.
The company will pay a special dividend of 30 pence a share, London-based Smiths said in a statement today. Sales climbed 2.6 percent to 3.11 billion pounds ($4.97 billion) in the fiscal year ended July 31, it said. The stock rose 2.6 percent, the biggest jump since July 1.
“The full-year 2013 results appear broadly in line with expectations, but there is a special dividend of 30 pence that is likely to be well-received,” Sandy Morris, an analyst at Jefferies, said in a note today . “Smiths Group continues to put its house in order” and the outlook for the current year is “robust,” he said. Morris recommends buying the shares.
Smiths will make savings of 50 million pounds a year through measures including the streamlining of manufacturing and reducing the number of management layers, according to today’s statement. The new savings measures will cost 100 million pounds to implement over three years. Smiths will continue to consider approaches for its business units, Chief Executive Officer Philip Bowman said on a conference call today.
The shares climbed 36 pence to 1,412 pence in London, taking the advance to 19 percent this year and giving the company a market value of 5.56 billion pounds.
“Smiths has the operational scope to enhance margins and strong cash generation should support both R&D and acquisition opportunities,” Scott Cagehin, an analyst at Numis Securities, said in a note today. “The shares should find support at these levels given that it remains a break-up story and trades at a sector discount.”
Smiths, founded as a family watchmaking business in the 19th century, said on Aug. 2 that a preliminary approach for the medical unit fell through because the two parties could not agree on terms.
Smiths hasn’t received any more approaches for the unit, Bowman said on the call. The division makes critical care and surgical products for hospitals, and had full-year sales of 850 million pounds.
Bowman said discussions regarding the sale were leaked “at a very early stage,” making it more difficult to reach an agreement. “We continue to look at the portfolio to satisfy ourselves that we are the best owner for the businesses.”
Smiths is paying the special dividend after disappointment in not making any acquisitions during the year, Bowman said.
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