Technology firm Smiths Group Plc. (SMIN.L) Wednesday reported increased profit for the first half of the year and hiked its dividend by 6 percent. The company sees tough trading conditions in the second half, but is confident of medium term growth.
Profit before taxation increased to 187.8 million pounds ($283.64 million) from 111.2 million pounds in the prior year, amid lower exceptional costs. Special items amounted to a charge of 35 million pounds compared to a charge of 106 million pounds in 2012. Headline pre-tax profit advanced 3 percent to 223 million pounds.
Profit attributable to the company's shareholders rose to 140.6 million pounds from last year's 83.8 million pounds. Earnings per share increased to 35.4 pence from 21.2 pence.
Revenue rose to 1.475 billion pounds from 1.407 billion pounds. Headline revenue growth was 4 percent. On an underlying basis, revenue rose 6 percent with growth across all divisions.
On an underlying basis, John Crane revenue rose 3 percent, driven by both original equipment and aftermarket revenue. The segment saw slow demand from first-fit OEM customers, particularly turbo machinery and general industrial applications, and order book points to a slower growth rate with a similar level of sales in the second half as in the last year.
Smiths Medical revenue rose up 2 percent, amid a 12 percent growth in emerging markets while developed markets remain challenging. Profitability is expected to be lower with investment and US device tax.
Smiths Detection revenue climbed 19 percent, as transportation and ports and borders led recovery momentum. The division looks for a similarly strong level of sales in the second half as last year, with improving margins.
Smiths Interconnect revenue grew 4 percent against a weak comparator period. Markets remain challenging for the business, particularly for US defence customers affected by sequestration.
In Flex-Tek, revenue increased 11 percent, backed mainly by aerospace and US residential construction. Margins continued to improve, amid better volumes, mix and pricing.
The Board has declared an interim dividend of 12.50 pence per share, an increase of 6 percent, reflecting the strong cash conversion in the period.
Looking ahead, Philip Bowman, CEO, said, "Looking to the second half, we see tough trading conditions as a result of the US medical device tax, slower demand in some parts of John Crane, and the impact of further government budget cuts. However, despite these challenges, there remain significant opportunities to generate value for shareholders over the medium term.''
SMIN.L settled down 0.8 percent on Tuesday at 1,318 pence.
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