Smiths Group PLC · LSE:SMIN
Smiths — CSFB Aerospace & Defence Conference 2004
17 slides from Smiths's conference presentation, Sep 29, 2004
Slide 1: Smiths Group
Smiths Group Presentation by: Alan Thomson, Financial Director Speaking at: the CSFB Aerospace & Defence Conference London, Wednesday 29 September 2004 www.smiths-group.com/ir CSFB 2004 Register here to receive regular information 1
Slide 2: Smiths Group: four divisions, all performing strongly
Smiths Group: four divisions, all performing strongly Contribution to FY 2004 proportion sales of op. profit 28% Smiths Aerospace £1,006m Systems and equipment for military and commercial aircraft Margin 10% 15% Smiths Detection £317 million Equipment for protection against threats to security Margi
Slide 3: Smiths Group: 2004 results
Smiths Group: 2004 results Continuing activities, before goodwill amortisation and exceptionals £m 2004 increase on 2003 (at constant currency) Sales 2,678 +7% Operating profit 360 +2% Pre-tax profit 350 +6% Earnings per share 45.9p cf 45.5p Dividends per share 27.0p + 4% 34 years of successive incr
Slide 4: Continuing to generate a healthy cash-flow
Continuing to generate a healthy cash-flow £m 2004 Operating profit (incl.discontinued) 362 Operating cash (after capex) 329 Conversion of profit to cash 91% well above 80% target Free cash-flow (after interest, tax, exceptionals) 255 equivalent to EPS acquisitions £215m, Net M&A proceeds 291 dispos
Slide 5: Looking ahead: Driving growth on two fronts
Looking ahead: Driving growth on two fronts 1 Achieving better • In all four divisions operational performance • Sales growth • Efficiency gains • Recent acquisitions 2 Adding valuable acquisitions • In all four divisions to the existing businesses • Demanding criteria • Financial resources ready Re
Slide 6: Operational performance: The drivers of growth in 2005
Operational performance: The drivers of growth in 2005 • commercial aerospace Market recovery • telecom infrastructure • high gross margins Volume increases • operational gearing effect • made late in 2004 Benefit of recent acquisitions • will give full year benefit in 2005 • strengthen all 4 divisi
Slide 7: Smiths Aerospace: Fundamental strengths
Smiths Aerospace: Fundamental strengths First tier supplier to aircraft primes 2004 Sales On all the important current programmes £1,006m Increase at constant Balanced 60/40 military/commercial split currency +7% Strong commitment to R&D/ technology leadership Contribution to operating profit Major
Slide 8: Smiths Aerospace: The drivers of continued growth
Smiths Aerospace: The drivers of continued growth 940 deliveries 2004 880 Recovery in commercial OE production 650 2000 2007 9/11 RPKs now Aftermarket demand increasing 2004 at 5% pa Will sustain Military procurement commitments 5% pa for 2 2004 more years Full benefit Restructuring benefits reached
Slide 9: Smiths Detection: Fundamental strengths
Smiths Detection: Fundamental strengths Market leadership in both Trace 2004 and X-ray detection Sales £317m Broadest range of applications Increase at constant currency Not dependent on airport security +21% Contribution to operating profit Significant investment in product innovation Worldwide sal
Slide 10: Smiths Detection: The drivers of continued growth
Smiths Detection: The drivers of continued growth • Military • First responders Market is still expanding rapidly • Airports • Ports and borders • Critical infrastructure New products are strengthening • BioSeeq • Sentinel II our competitive position • Centurion Over 40% of 2005 sales are 2005 2004
Slide 11: Smiths Medical: Fundamental strengths
Smiths Medical: Fundamental strengths Strong market niches in 2004 specialised devices Sales £487m Smiths is well-placed in the hospital and in the ex-hospital recovery sector Increase at constant currency Market grows steadily at 5-6% p.a +5% Contribution to operating profit Recent product intros a
Slide 12: Smiths Medical: The drivers of continued growth
Smiths Medical: The drivers of continued growth New Cozmonitor strengthens competitive position NeedlePro applications continue to be added New product pipeline Strong pipeline of other new products R&D New products Manufacturing transfer to Mexico/ Far East delivers improved performance Full benefi
Slide 13: Specialty Engineering
Specialty Engineering Fundamental strengths 2004 Very strong market leadership in rotating mechanical seals Sales £868m Technology innovator in electronic PICTURES TO COME… circuit connection and protection Increase at constant High margin businesses, currency generating a strong cash-flow +4% The d
Slide 14: Keeping input costs in check
Keeping input costs in check Sales 2004 £2.7 billion current outlook (% of sales) Payroll costs 30% Increases pegged to efficiency gains Purchased materials 20% Cost are rising: energy/metals/PVC Fixed costs 10% Less significance for Smiths Gross margin 40% S&D 10% G&A 11% Holding steady R&D 5% Net
Slide 15: Generating additional growth from valuable acquisitions
Generating additional growth from valuable acquisitions Recent track record 2004 after tax return Heimann: Cost £236m in Dec 2002 over 12% (in only 1.5 years) expected 2007 after tax return Six acquisitions in 2004: Cost £215m, March-July 2004 12% (3 years after acquisition) Acquisition criteria Exp
Slide 16: Smiths Group: Summary of outlook for 2005
Smiths Group: Summary of outlook for 2005 • Performance improving with market recovery • Recent acquisitions add to growth • Ready for more, using strong balance sheet • Investment criteria: minimum 12% after tax return on company’s total invested capital • Maintain the pace of profit growth establi
Slide 17: Smiths Group
Smiths Group www.smiths-group.com/ir CSFB 2004 Register here to receive regular information 17
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