Smiths Group PLC · LSE:SMIN
Smiths — H1 2005 Earnings Presentation
23 slides from Smiths's earnings presentation, Mar 16, 2005
Slide 1: Smiths Group Interim Results 2005
Smiths Group Interim Results 2005 London, Wednesday 16 March 2005 Presentation by: Keith Butler-Wheelhouse, Chief Executive Alan Thomson, Financial Director www.smiths-group.com/ir Interim Results 2005 Register here to receive regular information 1
Slide 2: Statutory reporting
Statutory reporting Chief Executive speaking Continuing and discontinued activities, after goodwill amortisation and exceptional items £m H1 2005 H1 2004 Sales 1,344 1,319 Operating profit 123 112 Profit before tax 125 105 EPS 15.9p 12.5p Interim Results 2005 2
Slide 3: Highlights
Smiths Group: Interim Results 2005 Highlights • Headline profit before tax up 16% at £155m* • Headline earnings per share up 17% at 20.4p* • At constant currency, all four divisions contributed to sales growth of 11%, headline operating profit growth of 16% • Medex acquisition scheduled to complete
Slide 4: Operating performance
Operating performance: For six months ended 31 Jan 2005 £m H1 2005 H1 2004 Sales 1,344 1,264 Headline operating profit 153 141 Margin 11% 11% Net interest (6) (9) Pensions financing 8 1 Headline profit before tax 155 133 EPS 20.4p 17.5p Dividend 9.25p 8.75p Interim Results 2005 4
Slide 5: Profit progression from H1 2004 to H1 2005
Profit progression from H1 2004 to H1 2005 operational improvement is the balance of: Pre-tax 2005 £155m + volume, productivity, restructuring _ input costs, pay rises £16m operational improvement £11m Pre-tax 2004 £133m exchange £(9)m interest/pension financing £10m R&D £(6)m acquisitions (after fu
Slide 6: Continuing progress on acquisitions
Continuing progress on acquisitions cost Aerospace DGT • engine components £57m Integrated Aerospace • landing gear systems £57m Cyrano • miniaturised detector £8m Detection SensIR • hazmat detection £41m Farran • millimetre wave technology £16m Medical DHD • US respiratory care devices £30m Spec. E
Slide 7: The acquisition of Medex: significant presence in critical care
The acquisition of Medex: Gives Smiths a significant presence in the critical care sector The combined range meets 95% of …and 90% of the requirement the requirement for safety devices… for anaesthesia disposables Other Hypodermic Spinals and Medex range epidurals Syringe pumps syringes IV sets Mede
Slide 8: The acquisition of Medex: comprehensive integration plan
The acquisition of Medex: A comprehensive integration plan is in place • Scheduled to complete on 21 March • Medex senior team secured • Overall organisation established • Medex and Smiths Anaesthesia & Safety Devices combined • New Critical Care division established • International organisation str
Slide 9: Financial update
Financial update Financial Director speaking Currency Exchange impact: £65m - sales, £9m - profit First-time contribution from 7 recent Acquisitions acquisitions: £10m in profit Margins Gross margin: 39% Restructuring Expenditure in period: £8m R&D Up 9% to £72m Interest Charge reduced by £3m Pensio
Slide 10: Operating profit into operating cash
Operating profit into operating cash £m 2005 Headline operating profit 153 Depreciation 35 Capital expenditure (47) (up 17, mainly aerospace) Retirement benefits (4) (top-up payments) Working capital (54) (increased stocks, for strong H2) Operating cash-flow 83 Operating profit into operating cash 5
Slide 11: Movement in net debt
Movement in net debt £m 2005 Operating cash (after cap-ex) 83 Interest and tax (37) Restructuring (10) (cash spend in period) Free cash-flow 36 Dividends (103) (2004 final dividend) Acquisitions (net) (58) Financing & exchange 6 Change in net debt (119) Net debt at 31 July 2004 (273) Net debt at 31
Slide 12: Divisional performance - sales
Divisional performance - sales Chief Executive speaking growth at £m H1 2005 constant currency Aerospace 514 +17% Detection 153 +10% Medical 237 +6% Specialty Engineering 440 +9% 1,344 +11% H1 2005 Aerospace 38% Specialty Eng 33% Medical 18% Detection 11% Interim Results 2005 12
Slide 13: Aerospace
Smiths Aerospace at constant Aerospace 25% £m H1 2005 currency Sales 514 +17% Operating profit 39 +24% Contribution to operating profit Margin 8% Boeing 787 • Delivered first systems for: Airbus A380, F-35 JSF, C-130 AMP • Development work on Boeing 787 Dreamliner on schedule Eurofighter • Selected
Slide 14: Aerospace: sales trends
Smiths Aerospace: sales trends 2003 2004 2005 2005 sales (underlying growth, excluding acquisitions, (expected) at constant currency) 20% 10% Civil OE Commercial OE Military OE 10% Aftermarket Military OE 10% Aftermarket Interim Results 2005 14
Slide 15: Detection
Smiths Detection at constant Detection 13% £m H1 2005 currency Sales 153 +10% Operating profit 21 +22% Contribution to operating profit Margin 13% Sentinel II • Timing of deliveries variable, government order patterns skewed to second half Ionscan 500 DT • Significant military awards, including: - U
Slide 16: Detection: a broad spread of applications
Smiths Detection: a broad spread of applications Military Airports Non-security applications Ports & borders Current sales Critical infrastructure First responders Interim Results 2005 16
Slide 17: Medical
Smiths Medical at constant Medical 26% £m H1 2005 currency Sales 237 +6% Operating profit 39 +7% Contribution to operating profit Margin 17% Epidural kit Two-thirds of profit generated in North America, significant translation impact Strong growth in safety devices, US market not yet Cozmonitor
Slide 18: Medical: new products driving underlying growth
Smiths Medical: new products driving underlying growth Low Dead Space - hypodermic CLEO - insulin catheter introducer AquinOx - heated airway humidification device Pneupac VR1 - emergency resuscitator Interim Results 2005 18
Slide 19: Specialty Engineering
Specialty Engineering at constant Spec. Eng. 36% £m H1 2005 currency Sales 440 +9% Operating profit 54 +14% Contribution to operating profit Margin 12% TRAK Higher sales and profits in all four activities John Crane - grew strongly in America John Crane - but was held back in Middle East - Russi
Slide 20: Divisional performance - operating profit
Divisional performance - operating profit growth at £m H1 2005 constant currency Aerospace 39 +24% Detection 21 +22% Medical 39 +7% Specialty Engineering 54 +14% 153 +16% Aerospace: benefited from rapid recovery in the commercial sector Detection: made good progress beyond the airport market M
Slide 21: A strong first half performance
Smiths Group: Interim Results 2005 £m H1 2005 H1 2004 Headline pre-tax profit 155 133 Headline earnings per share 20.4p 17.5p Interim dividend 9.25p 8.75p A strong first half performance Interim Results 2005 21
Slide 22: Group: Looking ahead
Smiths Group: Looking ahead Pick-up in commercial aerospace will continue R&D, new products generating incremental sales Recent acquisitions are contributing strongly The benefit of Medex starts in H2 Further productivity gains from current restructuring Smiths’ “second half” pattern will be repeate
Slide 23: Questions and Answers
Smiths Group Interim Results 2005 Questions and Answers www.smiths-group.com/ir Interim Results 2005 Register here to receive regular information 23