Smiths Group Plc · LSE:SMIN
Smiths — H1 2007 Earnings Presentation
20 slides from Smiths's earnings presentation, Mar 21, 2007
Slide 1: Smiths Group Interim Results 2007
Smiths Group Interim Results 2007 London, Wednesday 21 March 2007 Presentation by: Keith Butler-Wheelhouse, Chief Executive John Langston, Finance Director Making the world safer, healthier and more productive www.smiths.com/ir Register here to receive regular information ½
Slide 2: Highlights of the period
Smiths Group: Interim Results 2007 - Highlights of the period Chief Executive speaking Growth in continuing activities Headline EPS and operating profit up by 7% Headline operating margins improved in all three businesses Growth achieved despite significant currency impact Cash conversion from profi
Slide 3: Interim Results 2007
Interim Results 2007 2007 2006 £m Headline* Statutory Headline* Statutory Continuing activities Sales 1,021 1,007 Operating profit 148 149 139 136 Pre-tax profit 134 136 125 124 Basic EPS (p) 17.4p 18.6p 16.3p 16.5p *In addition to statutory reporting, Smiths Group reports its continuing operations
Slide 4: Headline performance - Continuing operations
Headline performance - Continuing operations £m 2007 2006 Reported Underlying* @ $1.92 @ $1.77 €1.49 €1.47 Sales 1,021 1,007 +1% +7% Operating profit 148 139 +7% +14% Margins 14.5% 13.8% Pre-tax profit 134 125 +8% +15% *Underlying performance excludes the year-on-year impact of currency translation
Slide 5: Smiths Detection: Margin increased, strong profit growth
Smiths Detection: Margin increased, strong profit growth £m 2007 2006 Reported Underlying Sales 182 171 +6% +10% Operating profit 27 24 +16% +22% Margin 15.0% 13.7% Port & Borders • Deliveries for airports in Europe, Middle & Far East at high levels • Strong growth in Ports & Borders Transportation
Slide 6: Smiths Medical: Strong underlying profit growth, margins improved
Smiths Medical: Strong underlying profit growth, margins improved £m 2007 2006 Reported Underlying Sales 347 355 -2% +3% Operating profit 60 59 +2% +9% Margin 17.4% 16.7% Medication Delivery • Temporary production constraints from transfer of manufacture to lower-cost locations • Margins helped by e
Slide 7: Specialty Engineering: Margin increased, exploiting market growth
Specialty Engineering: Margin increased, exploiting market growth £m 2007 2006 Reported Underlying Sales 492 481 +2% +8% Operating profit 61 56 +9% +16% Margin 12.3% 11.6% Of which John Crane Sales 252 245 +3% +11% Operating profit 31 27 +17% +27% Margin 12.4% 10.9% John Crane • John Crane benefitin
Slide 8: Continuing Acquisitions and Disposals
Continuing Acquisitions and Disposals Acquisitions Comet: August Specialty (H1 2007) Engineering £3m Italy Tecnicas Medicas: December (H1 2007) Medical £12m Spain CDI: March Specialty (H2 2007) Engineering £19m US Disposals Bearing lubrication August Specialty (John Crane): (H1 2007) Engineering £15
Slide 9: Profit progression from H1 2006 to H1 2007
Profit progression from H1 2006 to H1 2007 £m Headline pre-tax H1 2007 - £134m 23 Headline pre-tax H1 2006 - £125m Volume/ Labour costs mix (11) Exchange (8) 12 Efficiencies/ (7) Input costs synergies (3) (1) 4 Overhead costs Selling prices Interest Interim Results 2007 9
Slide 10: Financial update
Financial update Finance Director speaking Currency translation impact: sales: (£52m) headline operating profit: (£9m) Gross margin 47% Interest charge (£30m) Pensions financing benefit £16m Effective headline tax rate 26% Net effect of items included in statutory accounts £2m Update on legal matter
Slide 11: Operating cash conversion
Operating cash conversion (for six months ended 3 February) £m (for continuing activities) 2007 Headline operating profit 148 Share based payment 7 Property, plant & equipment (net of depreciation) (3) Development costs & other intangibles (11) (net of amortisation and deferred income) Changes in wo
Slide 12: Movement in net debt
Movement in net debt (for six months ended 3 February) £m 2007 Net debt at start of period (923) Operating cash (after capex etc) 124 Interest and tax (61) Exceptionals 22 85 Cash outflow from discontinued operations (17) Dividends (122) Acquisitions/disposals (9) Financing & exchange 48 Change in n
Slide 13: Making good progress on transactions
Making good progress on transactions: Announcements of 15 January Sale of Aerospace • Approved by shareholders at EGM for US $4.8 billion • Regulatory submissions filed by GE • Treated as discontinued operations Return of £2.1 billion • Class 1 circular to be issued once and share consolidation clea
Slide 14: The continuing Smiths Group
The continuing Smiths Group Chief Executive speaking Sales by Sales by division origin Detection US Medical UK/Eur The new shape of Smiths Group Specialty Engineering RoW Pro-forma 2006 John Crane £2.4 billion incl.JV Excellent Stronger Opportunities long-term markets financial performance for furth
Slide 15: Smiths GE Detection
Smiths GE Detection Proposed Smiths-led joint venture GMD: Fast-growing business Stephen Phipson in an expanding market Level 1 • Market still evolving rapidly, new threats create additional demand Level 2 • Smiths: comprehensive product range for airports and all other applications Level 3 • Close
Slide 16: Smiths Medical: Attractive market dynamics, significant opportunities for growth
Smiths Medical GMD: Attractive market dynamics, Srini Seshadri significant opportunities for growth • Consistent 5% growth in world market for healthcare devices • Smiths: good market positions, respected brands, constant product renewal • Effective global distribution network: Medication Critical D
Slide 17: Specialty Engineering: Above-GDP growth from specialised niches
Smiths Specialty Engineering GMD: Above-GDP growth Paul Cox from specialised niches • Highly-engineered components designed for safety-critical environments • John Crane: benefiting from sustained high capex in oil & gas industry • Interconnect: John Interconnect - network-centric drives military bu
Slide 18: Smiths Group: driving for Full Potential
Smiths Group: driving for Full Potential In summary, Smiths is: Operating in attractive market-sectors Going for global manufacturing, close to customers Confirming technology leadership Improving productivity in all activities Achieving organic + acquisitive growth Smiths is now well-positioned for
Slide 19: Smiths Group: Looking ahead
Smiths Group: Looking ahead “Looking ahead, Smiths is now focused on technology leadership and competitive market positions in sectors with attractive long-term prospects. In its new shape, the company has higher margins, better cash performance, an improved capital structure, resources for further
Slide 20: Questions and answers
Questions and answers A world leader in the practical application of advanced technologies Smiths Detection Smiths Medical Specialty Engineering Equipment for homeland defence, business Specialist devices and equipment Application-specific components in energy, security and protection of the militar