Smiths Group PLC · LSE:SMIN
Smiths — H1 2004 Earnings Presentation
27 slides from Smiths's earnings presentation, Mar 10, 2004
Slide 1: Smiths Group Interim Results 2004
Smiths Group Interim Results 2004 London, London, Wednesday Wednesday 10 10 March March 2004 2004 www.smiths-group.com/ir www.smiths-group.com/ir Register Register here here to to receive receive regular regular information information ½
Slide 2: Smiths Group: 2004 Interim Results
Smiths Smiths Group: Group: 2004 2004 Interim Interim Results Results Chairman Chairman speaking speaking Introduction Keith Orrell-Jones, Chairman Presentation Keith Butler-Wheelhouse, Chief Executive Financials Alan Thomson, Financial Director Smiths Interims 04 | 2
Slide 3: Key Messages
Smiths Smiths Group: Group: Interim Interim Results Results 2004 2004 Chief Chief Exec. Exec. speaking speaking Key Messages II Aerospace, Medical, Specialty Engineering all performing strongly II Underlying growth impacted by contract timing in Detection II Consistently good cash generation II Cont
Slide 4: Highlights of the Interim figures
Smiths Smiths Group: Group: Interim Interim Results Results 2004 2004 Highlights of the Interim figures II Earnings per share of 17.5p, compared with 18.9p a year ago* II Dividend maintained at 8.75p II Operating profit to operating cash conversion of 88%, after capex II Net debt down to £206m from
Slide 5: Operating performance
Operating Operating performance performance Continuing Continuing activities, activities, before before goodwill goodwill amortisation amortisation and and exceptional exceptional charges charges £m H1/2004 H1/2004 H1/2003 H1/2003 (restated) (restated) Turnover 1,264 1,236 Operating profit 141 155 M
Slide 6: Aerospace, Medical and Specialty Engineering all performing strongly
Aerospace, Aerospace, Medical Medical and and Specialty Specialty Engineering Engineering all all performing performing strongly strongly at at constant constant £m op. op. profit profit increase increase currency currency Aerospace 33 +13% +18% Medical 39 +7% +11% Specialty Engineering 51 +8% +9% 1
Slide 7: Detection impacted underlying growth in this period
Detection Detection impacted impacted underlying underlying growth growth in in this this period period H1/03 H2/03 H1/04 H2/04 Sales Sales £121m £121m Sales Sales £152m £152m Sales Sales £143m £143m Sales Sales increase increase Profits Profits £42m £42m Profits Profits £29m £29m Profits Profits £1
Slide 8: Delivering improved operational performance
Delivering Delivering improved improved operational operational performance performance 1 Cost management 2 Investment in new product development 3 Pursuing growth opportunities Driving top line growth Smiths Interims 04 | 8
Slide 9: Cost management
Delivering Delivering improved improved operational operational performance performance 1 Cost management II 2 2 year year programme programme with with clear clear operational operational benefits benefits II Improves Improves competitiveness/ competitiveness/ meets meets customer customer demands
Slide 10: Investment in new product development
Delivering Delivering improved improved operational operational performance performance 2 Investment in new product development II Company Company funded funded R&D R&D will will increase increase by by 10% 10% this this year year II Now Now running running at at 5% 5% of of sales sales II Additiona
Slide 11: Pursuing growth opportunities
Delivering Delivering improved improved operational operational performance performance 3 Pursuing growth opportunities II Leveraging Leveraging core core technologies technologies to to secure secure additional additional business. business. Example: Example: II Avionics Avionics systems systems de
Slide 12: Financial Director's update
Financial Financial Director’s Director’s update update Financial. Financial. Dir. Dir. speaking speaking Currency R&D Interest Tax Debt Pensions Smiths Interims 04 | 12
Slide 13: Operating profit into operating cash
Operating Operating profit profit into into operating operating cash cash £m 2004 2003 (restated) Operating profit 143 * 180 * Depreciation 37 43 Capital expenditure (30) (33) Retirement benefits 3 15 Working capital (27) (47) 126 158 Op. profit into op. cash 88% 88% ** continuing continuing and and
Slide 14: Movement in Net Debt
Movement Movement in in Net Net Debt Debt £m 2004 Operating cash (after (after cap-ex) cap-ex) 126 Interest and tax (36) Restructuring (6) Free cash-flow 15.0p 15.0p per per share share 84 Dividends (96) Acquisitions (14) Disposals 504 Financing & Exchange 31 Reduction in net debt 509 Net debt at 31
Slide 15: Divisional margins
Divisional Divisional margins margins Chief Chief Exec. Exec. speaking speaking operating operating profit profit £m H1/04 H1/04 margin margin H1/03 H1/03 margin margin Aerospace 33 7% 29 6% Detection 18 12% 42 35% Medical 39 17% 37 16% Specialty Engineering 51 12% 47 11% 141 11% 155 13% Specialty E
Slide 16: Smiths Aerospace
Smiths Smiths Aerospace Aerospace H1/2004 H1/2004 H1/2003 H1/2003 at at constant constant £m currency currency Turnover 456 461 -1% +3% Operating profit 33 29 +13% +18% Margin 7% 6% contrib. contrib. to to II Defence Defence business business performing performing well well op. op. profit profit II
Slide 17: Winning business on the Boeing 7E7
Winning Winning business business on on the the Boeing Boeing 7E7 7E7 II Smiths Smiths wins wins Common Common Core Core System System (CCS) (CCS) for for Boeing Boeing 7E7 7E7 II Re-affirms Re-affirms Tier Tier 1 1 systems systems integrator integrator status status II CCS CCS hosts hosts software
Slide 18: Smiths Detection
Smiths Smiths Detection Detection H1/2004 H1/2004 H1/2003 H1/2003 at at constant constant £m currency currency Turnover 143 121 +18% +20% Operating profit 18 42 -58% -55% Margin 12% 35% II Heimann Heimann performing performing strongly strongly contrib. contrib. to to II £4m £4m increase increase in
Slide 19: Strong Detection second half
Strong Strong Detection Detection second second half half mobile mobile x-ray x-ray for for Customs, Customs, anthrax anthrax detection detection for for USA USA USPS, USPS, trace trace detection detection for for TSA, TSA, ACADA ACADA for for DoD DoD UK MCAD/LCAD MCAD/LCAD for for DoD, DoD, Sentine
Slide 20: Acquisition of Cyrano Sciences
Acquisition Acquisition of of Cyrano Cyrano Sciences Sciences II Early Early stage stage technology technology company company II Chemical/biological Chemical/biological threat threat identification identification II Lightweight/low Lightweight/low cost cost devices devices using using polymer polym
Slide 21: Smiths Medical
Smiths Smiths Medical Medical H1/2004 H1/2004 H1/2003 H1/2003 at at constant constant £m currency currency Turnover 234 230 +2% +4% Operating profit 39 37 +7% +11% Margin 17% 16% II Manufacturing Manufacturing organised organised on on aa global global basis basis yielding yielding results results c
Slide 22: Cozmo sales growing strongly
Cozmo Cozmo sales sales growing growing strongly strongly II More More than than 7,000 7,000 sold sold since since launch launch in in December December ’02. ’02. II Salesforce Salesforce has has been been doubled, doubled, matched matched by by marketing marketing campaign campaign II Recent Recent
Slide 23: Specialty Engineering
Specialty Specialty Engineering Engineering H1/2004 H1/2004 H1/2003 H1/2003 at at constant constant £m currency currency Turnover 430 423 +2% +4% Operating profit 51 47 +8% +9% Margin 12% 11% contrib. contrib. to to Stable Stable portfolio portfolio of of businesses businesses op. II op. profit prof
Slide 24: Specialty Engineering: Business by business
Specialty Specialty Engineering: Engineering: Business Business by by business business John John Crane Crane II Strengthening Strengthening its its market market presence presence in in Russia, Russia, China China and and South South America America II Oil Oil & & gas gas sector sector showing show
Slide 25: H1/04: Summary
Smiths Smiths Group: Group: Interim Interim Results Results H1/04: H1/04: Summary Summary Dividend maintained Detection results masked strong growth in rest of Smiths B7E7 award re-affirms Tier 1 status in Aerospace Cash generation at 88% of profit Debt reduced to £206m Smiths Interims 04 | 25
Slide 26: Smiths Group: Outlook
Smiths Smiths Group: Group: Outlook Outlook Delivering Delivering improved improved operational operational performance performance Rapid Rapid recovery recovery in in Detection Detection Continued Continued growth growth in in Aerospace/Medical/Specialty Aerospace/Medical/Specialty Eng. Eng. Action
Slide 27: www.smiths-group.com/ir
www.smiths-group.com/ir www.smiths-group.com/ir Register Register here here to to receive receive regular regular information information ½