Smiths Group PLC · LSE:SMIN
Smiths — Investor Day (2017)
89 slides from Smiths's investor day presentation, 2017
Slide 1: Forward-looking statements
This document contains certain statements that are forward-looking statements. They appear in a number of places throughout this document and include statements regarding our intentions, beliefs or current expectations and those of our officers, directors and employees concerning, amongst other thin
Slide 2: SMITHS GROUP PLC CAPITAL MARKETS DAY 2017
SMITHS GROUP PLC CAPITAL MARKETS DAY 2017 | 2
Slide 3: SMITHS GROUP PLC CAPITAL MARKETS DAY 2017
SMITHS GROUP PLC CAPITAL MARKETS DAY 2017 | 3
Slide 4: What it means to be Smiths
WHAT IT MEANS TO BE SMITHS LEADING POSITIONS IN TARGETING ATTRACTIVE MARKETS STRONG STRONG OPERATIONAL PERFORMANCE EXECUTION GROWTH & RETURNS STRONG FINANCIAL FINANCIAL PERFORMANCE DISCIPLINE A HIGH PERFORMING, DIVERSIFIED TECHNOLOGY COMPANY SMITHS GROUP PLC CAPITAL MARKETS DAY 2017 | 4
Slide 5: Creating the future of Smiths
CREATING THE FUTURE OF SMITHS 2016 2017 2018 2019 AMBITION OUTPERFORMING A NEW SIGNIFICANT RETURN TO SUSTAINABLE OUR CHOSEN DIRECTION PROGRESS GROWTH GROWTH MARKETS SMITHS GROUP PLC CAPITAL MARKETS DAY 2017 | 5
Slide 6: A Smiths business
A SMITHS BUSINESS TECHNOLOGY INCREASING DIFFERENTIATION DIGITISATION TARGETED IN GROWING MARKETS SUSTAINABLY HIGH PROPORTION OF AFTERMARKET AND COMPETITIVE SERVICES AND ASSET LIGHT SMITHS GROUP PLC CAPITAL MARKETS DAY 2017 | 6
Slide 7: Targeted in growing markets
TARGETED IN GROWING MARKETS MEDICAL SECURITY & GENERAL OIL & SPACE & TECHNOLOGY DEFENCE INDUSTRIAL GAS COMMERCIAL AEROSPACE - Market growth: 3-4%1 - Market growth: 4-6%2 - Market growth: GDP+ - Market growth: 1-2%3 - Market growth: 4-6%4 - Smiths Medical; - Smiths Detection; - John Crane; Smiths - J
Slide 8: Top 3 leadership in targeted market segments
TOP 3 LEADERSHIP IN TARGETED MARKET SEGMENTS MARKET FIX ATTRACTIVENESS - Size EXIT - Growth 60% 75% - Segment profitability - Competitor landscape SPACE & MEDICAL SECURITY & GENERAL OIL & COMMERCIAL COMPETITIVE TECHNOLOGY DEFENCE INDUSTRIAL GAS AEROSPACE POSITION - Relative market share - Infusion s
Slide 9: Technology differentiation
TECHNOLOGY DIFFERENTIATION PRODUCTS & SERVICES CULTURE HORIZON INVESTMENT i3 SCAN CAPABILITIES SYNERGIES TARGETING R&D INVESTMENT 5% SALES + AND INCREASING VITALITY SMITHS GROUP PLC CAPITAL MARKETS DAY 2017 | 9
Slide 10: Increasing digitisation
INCREASING DIGITISATION CORE COMPETENCIES CREATING AI & MACHINE LEARNING VALUE FOR CUSTOMERS DATA ANALYTICS PHYSICAL DIGITAL CONNECTIVITY Market-leading Already central to DATA SECURITY installed base many Smiths products COMPETITIVE ADVANTAGE DEFINING FUTURE BUSINESS MODELS SMITHS GROUP PLC CAPITAL
Slide 11: High proportion of aftermarket and services
HIGH PROPORTION OF AFTERMARKET AND SERVICES ATTRACTIVENESS GROWTH DRIVERS CUSTOMER INTIMACY SELLING INTEGRATED SOLUTIONS PROFITABLE PREDICTIVE DIAGNOSTICS SUSTAINABLE PROPRIETARY CONSUMABLES TECHNOLOGY DIFFERENTIATION HARDWARE SPECIFIC SOFTWARE TARGETING AFTERMARKET SALES 60%+ SMITHS GROUP PLC CAPIT
Slide 12: Sustainably competitive and asset light
SUSTAINABLY COMPETITIVE AND ASSET LIGHT A CULTURE OF CONTINUOUS IMPROVEMENT – Customer SPEED AND EFFICIENCY - Shared operating model to deliver world-class competitiveness Supply People - Faster product development Chain - ~ 6x stock turns Smiths - ~20% working capital % sales Excellence - Robust pr
Slide 13: Parallel path
PARALLEL PATH 2016 2017 Medium term HIGH GRADING THE BUSINESSES 60% 75% 85% A WORLD LEADING TECHNOLOGY RISK OF EXECUTION COMPANY PORTFOLIO PRIORITISATION CAPITAL ALLOCATION DECISIONS RISK ASSESSMENT SMITHS GROUP PLC CAPITAL MARKETS DAY 2017 | 13
Slide 14: A world leading technology company
A WORLD LEADING TECHNOLOGY COMPANY - Organic growth above markets - Strong margins KEY PRIORITIES - Accelerated intensity in disciplined capital deployment - Merging leading physical positions with digital - Innovation driving sustainable growth and competitive differentiation - World class operatio
Slide 15: Creating the future of Smiths
CREATING THE FUTURE OF SMITHS CHOSEN MARKETS A WORLD TARGETED SEGMENTS LEADING DEFINED TECHNOLOGY CHARACTERISTICS RELENTLESS COMPANY EXECUTION SUSTAINABLE GROWTH AND ATTRACTIVE RETURNS SMITHS GROUP PLC CAPITAL MARKETS DAY 2017 | 15
Slide 16: SMITHS GROUP PLC CAPITAL MARKETS DAY 2017
SMITHS GROUP PLC CAPITAL MARKETS DAY 2017 | 16
Slide 17: SMITHS GROUP PLC CAPITAL MARKETS DAY 2017
SMITHS GROUP PLC CAPITAL MARKETS DAY 2017 | 17
Slide 18: Financial framework
FINANCIAL FRAMEWORK ASSET LIGHT ORGANIC INVESTMENT VALUE CREATIVE M&A CASH SUSTAINABLE MARGINS GENERATION PROGRESSIVE DIVIDEND STRONG BALANCE SHEET FINANCIAL DISCIPLINE SMITHS GROUP PLC CAPITAL MARKETS DAY 2017 | 18
Slide 19: Capital allocation criteria
CAPITAL ALLOCATION CRITERIA • Long term growth • Geographic coverage MARKET • Role of technology • Regulation impact FINANCIAL MARKET • Aftermarket potential • Cyclicality • Competitive landscape • Talent development STRATEGIC • Barriers to entry • Product differentiation • Category leadership • Cor
Slide 20: Organic investments
ORGANIC INVESTMENTS CADD® CORSYSTM SOLIS NCS VOLTA AURATM SEAL SMITHS SMITHSGROUP GROUPPLC PLCCAPITAL CAPITALMARKETS MARKETSDAY DAY2017 2017 | | 20 5
Slide 21: Case study: Morpho acquisition
CASE STUDY: MORPHO ACQUISITION MARKET STRATEGIC • Attractive growing market • Product and market complementary • Consolidated industry • Aftermarket opportunity • Developing technology • Talent development • Upgrade cycle in Europe • Economies of scale • Regulation knowledge • Accelerates growth • S
Slide 22: Case study: Wallace divestiture
CASE STUDY: WALLACE DIVESTITURE MARKET STRATEGIC KEEP - Brand KEEP - Market leading position EXIT - Required investment EXIT - Niche sub-segment - Lacked synergies with - Narrow product range Medical - Increasing competition - Limited product pipeline FINANCIAL KEEP - Attractive margins EXIT - Cash
Slide 23: Medium term ambition
MEDIUM TERM AMBITION OPERATIONAL FINANCIAL PERFORMANCE PERFORMANCE Competitive position Top 3 Outperforming our Organic revenue growth chosen markets R&D % sales 5-6% Operating margin 18-20% Vitality index ~20% ROCE 16-18% Stock turns ~6x WC % sales ~20% Aftermarket % 60%+ Cash conversion 100%+ SMIT
Slide 24: A world leading technology company
A WORLD LEADING TECHNOLOGY COMPANY GROWTH INVESTMENT RETURNS Outperforming our Out performing our chosen markets chosen markets MARGIN Achieving world-class 18-20% competitiveness ROCE Strong financial 16-18% framework CASH CONVERSION 100%+ SMITHS GROUP PLC CAPITAL MARKETS DAY 2017 | 24
Slide 25: SMITHS GROUP PLC CAPITAL MARKETS DAY 2017
SMITHS GROUP PLC CAPITAL MARKETS DAY 2017 | 25
Slide 26: SMITHS GROUP PLC CAPITAL MARKETS DAY 2017
SMITHS GROUP PLC CAPITAL MARKETS DAY 2017 | 26
Slide 27: Detection driving growth
DETECTION DRIVING GROWTH STRONG LONG-TERM SMITHS DETECTION IS WELL- GROWTH MARKETS POSITIONED AIR AIR TRANSPORTATION TRANSPORTATION - Evolving threat environment PORTS & - Global market leader PORTS & BORDERS BORDERS - Regulatory response - Total integrated solutions provider - Growing numberMILITAR
Slide 28: Detection markets
DETECTION MARKETS CHARACTERISTICS Market Market size growth Technology Increasing (2016) CAGR 2017-2022 differentiation digitisation Aftermarket 58%* AIR TRANSPORTATION £1.4bn 6% PORTS & 13%* BORDERS £0.9bn 5% 8%* MILITARY £0.4bn 5% URBAN 21%* SECURITY £0.9bn 4% >50% of revenue from * Pro forma (inc
Slide 29: Air transportation: growth drivers and competitive landscape
AIR TRANSPORTATION: GROWTH DRIVERS AND COMPETITIVE LANDSCAPE Global Air Cargo PAX (bn) (tonnes bn) VOLUME GROWTH IS GDP+ 25 400 DEMAND GROWTH DRIVERS 350 - GDP/capita expansion and growing urbanisation 20 300 15 Aviation Passengers (4.9% CAGR) 250 10 200 - Global trade and e-commerce 150 Air Cargo (
Slide 30: Air transportation: innovation and cycle
AIR TRANSPORTATION: INNOVATION AND CYCLE HOLD BAGGAGE CHECKPOINT 5000 US 4000 # units ELECTRONICS Regulatory replaced Environment 3000 RoW LIQUIDS 2000 1000 ECAC Std 3 FLOW LANES CENTRALISED SCREENING INTEGRATED CHECKPOINT 0 2016 2020 2024 Technology Integrated Lanes CUSTOMER-NEED DRIVEN SEGMENTATIO
Slide 31: Morpho integration
MORPHO INTEGRATION SUPPORTS FUTURE GROWTH - Improved commercial positioning - New structure in place and business processes re-designed - Combined technology roadmap: focus and remove overlap - Common aftermarket processes and cross-train engineers SYNERGIES ON TRACK - Footprint rationalisation to r
Slide 32: Ports & Borders
PORTS & BORDERS Width of line = Illustrative Trade Volumes 2010 2030 GROWTH DRIVERS SMITHS DETECTION - Seaborne trade volume more than doubles 2010 - 2030 - Focused investment in mobile and portal hardware - Traditional East-West trading patterns are being replaced with - Highest future demand incre
Slide 33: Ports & Borders
PORTS & BORDERS iC More: image enhancement to improve screening efficiency CORSYS: radical improvement in pre-screening decision making SMITHS GROUP PLC CAPITAL MARKETS DAY 2017 | 33
Slide 34: Military
MILITARY SMITHS DETECTION CHEMICAL WARFARE AGENT DETECTION: £0.4bn Defence/ CBRNE: - Invest in DoD programmes of record £2.9bn Smiths Detection addresses only niche segments of the − Next generation development in investment defence CBRNE market phase 2015-2020 ahead of new procurement cycle from 20
Slide 35: Urban security
URBAN SECURITY HIGH SECURITY EVENTS & VENUES MASS TRANSIT HUBS PUBLIC AREAS FACILITIES GROWTH DRIVERS SMITHS DETECTION - Growing urbanisation - Mass Transit - especially in China - Increasing threat environment and need to - Securing mass gatherings / open spaces protect - or be seen to protect - pe
Slide 36: Creating the future: Smiths Detection
CREATING THE FUTURE: SMITHS DETECTION TECHNOLOGY INCREASING DIFFERENTIATION DIGITISATION • Unrivalled R&D capability • Software and digital solutions deliver • Integrated solutions revenue growth with enhanced margins and low working capital requirement GROWING MARKET HIGH PROPORTION OF 4-6% SUSTAIN
Slide 37: SMITHS GROUP PLC CAPITAL MARKETS DAY 2017
SMITHS GROUP PLC CAPITAL MARKETS DAY 2017 | 37
Slide 38: SMITHS GROUP PLC CAPITAL MARKETS DAY 2017
SMITHS GROUP PLC CAPITAL MARKETS DAY 2017 | 38
Slide 39: Medical device industry overview
MEDICAL DEVICE INDUSTRY OVERVIEW AN ATTRACTIVE MARKET WITH STRONG GROWTH DRIVERS Market size % Served Total Products GROWTH DRIVERS revenue market market Ambulatory and syringe infusion pumps, PharmGuard software, disposables, gravity • Expansion of developing markets Infusion systems 32% £1.5bn £20
Slide 40: Where we have competitive strengths
WHERE WE HAVE COMPETITIVE STRENGTHS WE’LL LEVERAGE THESE STRENGTHS AS WE INTRODUCE A STRONG NEW PRODUCT PIPELINE • Trusted brands and quality products In >95% of the top Strong presence with US hospitals GPOs / IDNs / tenders • 82% of revenue is from single-use devices used in everyday hospital proc
Slide 41: Winning takes category leadership more than portfolio breadth
WINNING TAKES CATEGORY LEADERSHIP MORE THAN PORTFOLIO BREADTH WE’RE MAKING THE CHANGES REQUIRED TO REVITALISE THE BUSINESS AND DRIVE GROWTH • Leadership within categories is more important than scale across categories, and will drive advantaged performance & results. • Achieving category leadership
Slide 42: Increased R&D investment is driving a new future
INCREASED R&D INVESTMENT IS DRIVING A NEW FUTURE WE ARE FOCUSED ON DELIVERING RESULTS AND INTRODUCING INNOVATIVE NEW PRODUCTS ACROSS THE PORTFOLIO • Investing smarter in Research & Development each year HOW WE Waited too long WERE • Development of innovative, commercially focused products MATURITY •
Slide 43: Robust pipeline of new product introductions
ROBUST PIPELINE OF NEW PRODUCT INTRODUCTIONS SUBSTANTIAL PRODUCTS THAT ARE ALIGNED WITH INDUSTRY TRENDS AND INNOVATIONS NUMBER OF PRODUCT LAUNCHES 50% 2 of these Planned new product launches in products 14 remainder of launched in Q4 FY18 We will refresh Products already 50% of our current 2 launche
Slide 44: Product launches
PRODUCT LAUNCHES MARKET KNOWLEDGE OF WHAT IS VALUED BY CUSTOMERS AND HOW TO GET THERE RECENT LAUNCHES IN THE PIPELINE Comprehensive suite NEW AMBULATORY INFUSION of connected interoperable pumps • £0.4bn market for hospitals, clinics Clinician’s handheld device Hospital server • We are a leading pla
Slide 45: Reshaping our portfolio to higher growth segments
RESHAPING OUR PORTFOLIO TO HIGHER GROWTH SEGMENTS MOVING TO THE BEST OPPORTUNITIES TO ENHANCE FUTURE GROWTH • Large volume infusion Infusion • Non-acute ambulatory TARGET ADJACENCIES Systems • Disposable pumps • Complementary growth technologies • Hybrid solutions Vascular • Solving real problems •
Slide 46: Strong relationships with key customers and stakeholders
STRONG RELATIONSHIPS WITH KEY CUSTOMERS AND STAKEHOLDERS THE RIGHT CONNECTIONS IN THE RIGHT PLACES TO MAKE A DIFFERENCE SALES CHANNELS RELATIONSHIP MAP WITH KEY STAKEHOLDERS Corporate Account Manager Distributor Business Manager Account Manager • Intensive Care Group Hospital • Anesthesiology Purcha
Slide 47: Sales force effectiveness evolution
SALES FORCE EFFECTIVENESS EVOLUTION MONITORING EFFECTIVENESS AND MAKING THE REQUIRED ADJUSTMENTS ROBUST SALESFORCE CONTINUOUS MONITORING OF COMPREHENSIVE SALES ACROSS REGIONS RESULTS & EFFECTIVENESS TRAINING PROGRAMS Conventional sales structure Performance results Content • Regional • Product Knowl
Slide 48: Creating the future: Smiths Medical
CREATING THE FUTURE: SMITHS MEDICAL TECHNOLOGY DIFFERENTIATION INCREASING DIGITISATION • Proactive product life cycle • Connected systems • Increase customer intimacy • Operating systems interactions • Drive value to providers and clinicians • Data analytics GROWING MARKET HIGH PROPORTION OF 3-4%* S
Slide 49: SMITHS GROUP PLC CAPITAL MARKETS DAY 2017
SMITHS GROUP PLC CAPITAL MARKETS DAY 2017 | 49
Slide 50: SMITHS GROUP PLC CAPITAL MARKETS DAY 2017
SMITHS GROUP PLC CAPITAL MARKETS DAY 2017 | 50
Slide 51: Interconnect – 2017
INTERCONNECT – 2017 FOCUS CHANGE PREPARE SMITHS GROUP PLC CAPITAL MARKETS DAY 2017 | 51
Slide 52: Position for growth
POSITION FOR GROWTH SIX FOCUS MARKETS - With higher growth profile - Where our enabling technologies drive differentiation - Where Tech-Seekers and Tech-Partners are market leaders TACTICS - Transition to functional professionalised organisation - Implement Key Account Management - Rationalise distr
Slide 53: Interconnect applications within focus markets
INTERCONNECT APPLICATIONS WITHIN 6 FOCUS MARKETS SPACE COMMERCIAL AEROSPACE £460m served market £660m served market - GEO/MEO satellites - Avionics equipment - LEO satellites - Engine systems - Launchers - Power distribution - Manned space flight - SATCOM connectivity - Ground support equipment MEDI
Slide 54: Strategy validated
STRATEGY VALIDATED FOCUS ON 6 VERTICAL MARKETS - Divested businesses impact: ROCE, revenue & margin growth improvement in retained business versus prior perimeter (FY16 v FY17) TECHNOLOGY-SEEKERS/ TECHNOLOGY-PARTNERS - KAM CHANNEL RATIONALISATION - Decreased number of distributors from 114 to 56 – s
Slide 55: Execution delivering results
EXECUTION DELIVERING RESULTS GLOBAL ORGANISATION STRUCTURE AROUND FUNCTIONS REDUCED COMPLEXITY AND PROFESSIONALISED - Footprint from 28 to 23 sites - Selling full suite of Interconnect products - Operational excellence: 30% reduction in suppliers - Engineering talents redirected to key projects glob
Slide 56: Future
FUTURE Viewed as a partner of choice – making the way possible - Aviation, Defence, Space, Medical, Rail, and Semiconductor Test markets - Solutions for high speed, secure connectivity in demanding applications Increase vitality index - 50% of R&D spend in next generation and transformational progra
Slide 57: Creating the future: Smiths Interconnect
CREATING THE FUTURE: SMITHS INTERCONNECT TECHNOLOGY SYNERGIES $30M ANNUALISED BY END OF THIRD YEAR INCREASING DIFFERENTIATION DIGITISATION • R&D focused on next generation and • An enabler of digitisation across transformative innovation industries • Technology partner customers • Solutions for high
Slide 58: SMITHS GROUP PLC CAPITAL MARKETS DAY 2017
SMITHS GROUP PLC CAPITAL MARKETS DAY 2017 | 58
Slide 59: SMITHS GROUP PLC CAPITAL MARKETS DAY 2017
SMITHS GROUP PLC CAPITAL MARKETS DAY 2017 | 59
Slide 60: i3 The Smiths Group innovation framework
i3 THE SMITHS GROUP INNOVATION FRAMEWORK PRODUCTS & SERVICES CULTURE i3 HORIZON INVESTMENT SCAN CAPABILITIES SYNERGIES SMITHS GROUP PLC CAPITAL MARKETS DAY 2017 | 60
Slide 61: i3 innovation framework: culture
i3 THE SMITHS GROUP INNOVATION FRAMEWORK CULTURE i3 INNOVATIVE CUSTOMER CENTRIC COLLABORATIVE SMITHS GROUP PLC CAPITAL MARKETS DAY 2017 | 61
Slide 62: i3 innovation framework: horizon scan
i3 THE SMITHS GROUP INNOVATION FRAMEWORK HORIZON SCAN i3 MEGATRENDS EMERGING TECHNOLOGIES LONG RANGE PLANNING SMITHS GROUP PLC CAPITAL MARKETS DAY 2017 | 62
Slide 63: i3 innovation framework: synergies
i3 THE SMITHS GROUP INNOVATION FRAMEWORK SYNERGIES i3 DIGITAL & IoT ADDITIVE MANUFACTURING MATERIALS & NANOTECHNOLOGY SMITHS GROUP PLC CAPITAL MARKETS DAY 2017 | 63
Slide 64: i3 innovation framework: capabilities
i3 THE SMITHS GROUP INNOVATION FRAMEWORK CAPABILITIES i3 PEOPLE COMMERCIAL PARTNERS ACADEMIC PARTNERS SMITHS GROUP PLC CAPITAL MARKETS DAY 2017 | 64
Slide 65: i3 innovation framework: investment
i3 THE SMITHS GROUP INNOVATION FRAMEWORK INVESTMENT New to World Company i3 New to Market Existing INCREASED R&D New to New to SMARTER R&D Existing Company World SUPPORTING METRICS Innovation SMITHS GROUP PLC CAPITAL MARKETS DAY 2017 | 65
Slide 66: i3 innovation framework: products & services
i3 THE SMITHS GROUP INNOVATION FRAMEWORK PRODUCTS & CORSYS NEXT GEN CONNECTIVITY SERVICES DIGITAL & IoT DIGITAL & IoT i3 MACHINE LEARNING IOT PLATFORM DIGITAL & IoT DIGITAL & IoT ADVANCED CERAMICS A.M. CONSORTIUM NEW REVENUE STREAMS NANOTECHNOLOGY ADDITIVE MANUFACTURING NEW BUSINESS MODELS ENABLED B
Slide 67: SMITHS GROUP PLC CAPITAL MARKETS DAY 2017
SMITHS GROUP PLC CAPITAL MARKETS DAY 2017 | 67
Slide 68: SMITHS GROUP PLC CAPITAL MARKETS DAY 2017
SMITHS GROUP PLC CAPITAL MARKETS DAY 2017 | 68
Slide 69: 1975 Today
1975 Today SMITHS GROUP PLC CAPITAL MARKETS DAY 2017 | 69
Slide 70: Digital Forges
DIGITAL FORGES FIRST DIGITAL FORGE ESTABLISHED IN SILICON VALLEY 2 DIGITAL FORGES TO OPEN IN LONDON AND ASIA SMITHS GROUP PLC CAPITAL MARKETS DAY 2017 | 70
Slide 71: Digital Forge focus
DIGITAL FORGE FOCUS SMITHS ALGORITHMS, HIGH PERFORMANCE COMPUTING, ARTIFICAL INTELLIGENCE, DATA SECURITY JOHN CRANE MEDICAL DETECTION INTERCONNECT FLEX-TEK - Predictive - Connectivity - Predictive - Transformational - Monitoring maintenance maintenance connectivity and smart - Operating products sys
Slide 72: SMITHS GROUP PLC CAPITAL MARKETS DAY 2017
SMITHS GROUP PLC CAPITAL MARKETS DAY 2017 | 72
Slide 73: SMITHS GROUP PLC CAPITAL MARKETS DAY 2017
SMITHS GROUP PLC CAPITAL MARKETS DAY 2017 | 73
Slide 74: John Crane: global leader in flow control for rotating equipment
JOHN CRANE: GLOBAL LEADER IN FLOW CONTROL FOR ROTATING EQUIPMENT WE SOLVE COMPLEX CUSTOMER PROBLEMS, INCREASING THEIR PRODUCTIVITY THROUGH HIGHER RELIABILITY AND EFFICIENCY OF CRITICAL EQUIPMENT - 100 years of bringing technology to market - Unmatched proximity, services and expertise - Broad instal
Slide 75: John Crane growth strategy
JOHN CRANE GROWTH STRATEGY - Increase first-tier share in core O&G markets GROW THE - Expand in non O&G verticals CORE - Accelerate our growth in Asia - End to end differentiated products and services CREATE - Digitisation MORE VALUE - New product portfolio and disruptive technologies DRIVE - Smiths
Slide 76: Operational excellence
OPERATIONAL EXCELLENCE Customer Supply People Chain Smiths Excellence System Programme Technology Production SMITHS GROUP PLC CAPITAL MARKETS DAY 2017 | 76
Slide 77: SES@John Crane: Technology
SES@JOHN CRANE: TECHNOLOGY Technology Heritage of game-changing technology Digital solutions ― John Crane Sense™ - Sensors and machine learning/artificial intelligence Advanced materials and nanotechnology New Seal Products - Aura™ gas seals family - Crude oil pipeline seal - Single use seal Additiv
Slide 78: SES@John Crane: Production
SES@JOHN CRANE: PRODUCTION Production Drive collaboration between Engineering and Operations to standardize parts production across entire global network FY 17 ACTIONS - Evaluate feasibility to use 3D CAD models and CAM to program machine tools - Create proof of concept and plan for pilot program FU
Slide 79: SES@John Crane: Supply chain
SES@JOHN CRANE: SUPPLY CHAIN Supply Reduce inventory without impacting customer Chain service (50% in Manufacturing, 50% in Service network) FY 17 ACTIONS • Developed and executed a multi-pronged inventory reduction • Leveraged Demand Connect to balance supply at multiple nodes with demand -12% FY 1
Slide 80: Creating the future: John Crane
CREATING THE FUTURE: JOHN CRANE TECHNOLOGY INCREASING DIFFERENTIATION DIGITISATION • Bespoke solutions • Leveraging large installed base • Disruptive technologies • Big data and artificial intelligence • Additive manufacturing GROWING • Multi service across prognostics and maintenance optimisation M
Slide 81: SMITHS GROUP PLC CAPITAL MARKETS DAY 2017
SMITHS GROUP PLC CAPITAL MARKETS DAY 2017 | 81
Slide 82: Smiths Group
SMITHS GROUP 2017 REVENUE 2017 OPERATING PROFIT 10% 10% 27% 9% 13% 32% 16% 21% 29% 33% John Crane Medical Detection Interconnect Flex-Tek John Crane Medical Detection Interconnect Flex-Tek Based on reported FY 2017 numbers SMITHS GROUP PLC CAPITAL MARKETS DAY 2017 | 82
Slide 83: Smiths Group - 2017
SMITHS GROUP - 2017 SMITHS SMITHS JOHN CRANE SMITHS MEDICAL FLEX-TEK GROUP DETECTION INTERCONNECT Revenue £885m £951m £687m £419m £338m £3,280m (£’m) Revenue growth* (4)% (3)% +4% +1% +3% (1)% (%) Operating profit £204m £209m £103m £56m £65m £589m** (£’m) Operating margin 23.0% 22.0% 15.0% 13.4% 19.
Slide 84: Revenue analysis
REVENUE ANALYSIS* JOHN CRANE SMITHS MEDICAL SMITHS DETECTION SMITHS INTERCONNECT FLEX-TEK Oil & gas Infusion systems Air transportation Defence Construction Non-oil & gas Vascular access Ports and borders Semi-Conductor Fluid Management Vital Care Military Medical Heat SoIutions Urban security Space
Slide 85: John Crane
JOHN CRANE OE/AM COMPETITIVE LANDSCAPE Aftermarket 64% OE 36% • Flowserve • EagleBurgmann END MARKETS • c.55% oil & gas • c.45% non-oil & gas GEOGRAPHIES Americas 45% - 85% downstream - Pharmaceutical Europe 27% - 15% midstream - Chemicals APAC 16% - Pulp & paper RoW 12% - Water treatment *Pro-forma
Slide 86: Smiths Medical
SMITHS MEDICAL SEGMENTS COMPETITIVE LANDSCAPE Infusion systems 32% • Becton-Dickinson (BD) Vascular access 33% • B Braun Vital Care and Specialty • Teleflex products 35% • ICU • Fresenius • Vyaire GEOGRAPHIES Americas 58% • AngioDynamics Europe 24% APAC 16% RoW 2% *Pro-forma (i.e excludes Wallace) S
Slide 87: Smiths Detection
SMITHS DETECTION* SEGMENTS COMPETITIVE LANDSCAPE Air transportation 58% Ports and borders 13% • L3 Military 8% • Rapiscan Urban security 21% • Nuctech • Leidos (Reveal) GEOGRAPHIES Americas 37% Europe 28% APAC 17% RoW 18% * Proforma (i.e. includes 12 months of Morpho Detection) SMITHS GROUP PLC CAPI
Slide 88: Smiths Interconnect
SMITHS INTERCONNECT* Defence 37% END MARKETS COMPETITIVE LANDSCAPE Semi-Conductor 18% Medical 9% • Our competitors range from large Space 7% multinationals through to small, Commercial aerospace 14% more focused companies across our product portfolio. Rail, Industrial, Other 15% • Examples include A
Slide 89: Flex-Tek
FLEX-TEK SEGMENTS COMPETITIVE LANDSCAPE Construction 32% Fluid Management 24% • Fluid management - Parker and Heat Solutions 25% Eaton for flex assemblies and Flexible Solutions 19% numerous smaller competitors for metal products. • Construction – c.7-8 competitors. • Flexible solutions – c.5-6 comp