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Smiths Group Full-year Pre-tax Profit Down; Sees Revenue Growth

Smiths Group Plc (SMIN.L, SMGZY.PK) reported Wednesday a decline in fiscal 2012 profit hurt by one-time costs. The British technology company's revenue, however, increased with growth across all divisions.

Looking ahead, Chief Executive Philip Bowman said, "The economic environment remains uncertain. Pressures on government spending are expected to continue.... However, our investment initiatives are building a solid foundation to accelerate medium-term revenue growth."

For the year, pre-tax profit declined to 365.9 million pounds from last year's 397.9 million pounds. Earnings per share was 64.9 pence, compared with 97.1 pence last year.

The latest results included charges of 130.9 million pounds related to exceptional items, amortisation of acquired intangibles and other financing gains and losses.

Headline pre-tax profit, which excluded items, was 496.8 million pounds, while prior year's headline profit was 462.7 million pounds.

Revenue for the year was 3.04 billion pounds, 7 percent higher than last year's 2.84 billion pounds. On an underlying basis, excluding currency translation and acquisitions, revenues grew 5 percent.

Operating margin was 13.4 percent, lower than prior year's 15.4 percent. Headline operating margin was 18.2 percent. Bowman said, "Smiths Group has performed well in a persistently tough economic environment, growing revenue across all divisions with a stronger performance in the second half. Headline margins were maintained while we significantly increased our investment in sales, marketing and new product development."

Segment-wise, John Crane's revenues grew 9 percent strongly on continued demand from its end markets, particularly the oil and gas sector; although the rate of growth eased during the second half. The acquisition of the business of Turbo Components and Engineering Inc. benefited the results, partly offset by adverse currency translation.

Smiths Medical's revenue was benefited by new product launches and growth in emerging markets, despite tough operating environment with healthcare spend constraints and pricing pressures. In the year, emerging market revenue increased 14 percent.

In Smiths Detection segment, growth in equipment sales to airports and critical infrastructure more than offset declines in military and emergency responder revenue. The performance improvement program, announced last year, also generated cost savings and operational enhancements.

Smiths Interconnect's revenue was driven by strong growth in microwave offset by declines in connectors and power management. Revenue was also helped by acquisition of Power Holdings, Inc. The segment saw a better second half resulting in overall revenue growth despite declines in its military sales as a result of lower defence spending.

Flex-Tek's revenue grew 5 percent driven primarily by aerospace and US residential construction. The company projects that the aerospace and US construction sectors would support continued sales growth.

The company also announced a final dividend of 26.25p per share, giving a total for the year of 38.0p, an increase of 5 percent.

Going ahead, Smiths said it will continue to deliver operational improvements and efficiencies, while balancing increased investment in the drivers of long-term profitable growth with opportunities to enhance margins and returns.

In London, Smiths shares are currently trading at 1,059 pence, up 17 pence or 1.63 percent.

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by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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