Smiths Group Plc · LSE:SMIN
Smiths — Shareholder Meeting (November 2016)
21 slides from Smiths's shareholder meeting presentation, Nov 15, 2016
Slide 1: Being the best at what we do
Smiths Group plc Annual General Meeting 15 November 2016 Being the best at what we do www.smiths.com 1 Smiths Group plc Annual Results 2016
Slide 2: Disclaimer
Disclaimer 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
Slide 3: Overview – Sir George Buckley, Chairman
Overview Sir George Buckley Chairman 3 Smiths Group plc Annual Results 2016
Slide 4: New net value creation
New net value creation Direct ways to create new shareholder value in a company 1. Growth in organic sales 2. Growth in operating margin 3. Removing working capital from the balance sheet 4. Improving the P/E ratio Subsidiary ways 1. Reducing income and other taxes 2. Acquisitions…… but only if purc
Slide 5: The anatomy of a great company
The anatomy of a great company 1. Steadily increasing, above market sales and EPS growth 2. Stable or improving ROIC GAAP like measures 3. Consistent ~100% cash conversion 4. Increasing working capital returns 5. Steadily gaining market share - by creating new products, new markets and powerful bran
Slide 6: Overview – Andy Reynolds Smith, Chief Executive
Overview Andy Reynolds Smith Chief Executive 6 Smiths Group plc Annual Results 2016
Slide 7: Smiths Group Full year highlights
Smiths Group Full year highlights • Growth in reported revenue and headline operating profit in four out of five divisions • Good margin expansion in Smiths Medical, Smiths Detection and Smiths Interconnect • John Crane margins resilient at 21.9% • Morpho Detection acquisition expected to complete i
Slide 8: Smiths Group Full year highlights – cash and debt
Smiths Group Full year highlights • Strong cash generation • Reduced net debt to £978m • Pension assets substantially de-risked • deficits lowered • lower cash contributions Headline Cash conversion Headline EPS Dividend per share free cash flow 102% 85.2p 42.00p £400m -1% +2.4% +18% 8 Smiths Group
Slide 9: John Crane Full year highlights
John Crane Full year highlights • Difficult oil and gas market conditions • 57% of revenue from oil & gas markets • Aftermarket revenue down 4% • First-fit revenue down 16% • Strong cost control actions underway, 400 headcount reduction • Disposal of artificial lift business Revenue Headline Headlin
Slide 10: Smiths Medical Full year highlights
Smiths Medical Full year highlights • Continued revenue growth, led by Vital Care • Emerging market sales increased 10%: − China +22% − India +21% • R&D increased from 5% to 6% of revenue, supporting increased product launches and pipeline • Disposal of Wallace business Revenue Headline Headline ope
Slide 11: Smiths Detection Full year highlights
Smiths Detection Full year highlights • Strong revenue growth led by Ports & Borders • Operating profit growth boosted by value engineering and management actions • R&D 5% of revenue, focused on product launches in transportation and military • Morpho Detection expected to complete early 20171 Reven
Slide 12: Smiths Interconnect Full year highlights
Smiths Interconnect Full year highlights • Lower revenue reflecting mixed end markets • Margins rose across our main product lines: − productivity improvements − procurement savings • Reorganisation to focus on target markets and customers • R&D 6% of revenue, focused on higher growth market segment
Slide 13: Flex-Tek Full year highlights
Flex-Tek Full year highlights • Diverse end market performance: − US housing growth − growing medical demand • Margins softened from Construction product transition and lower industrial volumes • Continuing sales growth in China Revenue Headline Headline operating operating profit profit margin £284
Slide 14: Our vision and strategic priorities
Our vision and strategic priorities One of the world’s leading technology companies Outperforming Achieving our chosen world-class markets competitiveness Strong financial framework 14 Smiths Group plc Annual Results 2016
Slide 15: The majority of our businesses are well positioned
The majority of our businesses are well positioned High Market attractiveness Medium 60%+ Size Growth Segment profitability Low Competitor concentration Low Medium High Competitive Relative market share Relative profitability % = of Smiths Group revenues position Relative growth 15 Smiths Group plc
Slide 16: The growth framework
Outperforming our chosen markets The growth framework • Focus on growing market segments • Are we in the right geographies? • Do we serve the right customers? • Increased aftermarket • Increase value of content with each customer • High competitive differentiation Market leadership = Top 3 market po
Slide 17: Smiths driven by Excellence System
Achieving world-class competitiveness Smiths driven by Excellence System Customer Supply Chain People Excellence Programme Technology Production 17 Smiths Group plc Annual Results 2016
Slide 18: A culture of innovation
Achieving world-class competitiveness A culture of innovation • Developing Group-wide capabilities • 250 software engineers today • Key strengths in diagnostics, security algorithms, and software libraries • Moving to end-to-end solutions • New central fund focused on Digital transformation 3D p
Slide 19: Characteristics of a Smiths business
A Smiths business Characteristics of a Smiths business Technological Increasing differentiation digitisation Positioned in growing markets High proportion Sustainably of aftermarket and competitive recurring revenues and asset light More focused, better businesses in Top 3 leadership positions 19 Sm
Slide 20: Creating one of the world's leading technology companies
Creating one of the world’s leading technology companies Growth and Returns New Product Innovation vitality Value Improve attractive market focus Improve competitive position In-depth review of markets and Smiths competitiveness Time 20 Smiths Group plc Annual Results 2016
Slide 21: Questions & Answers
Questions & Answers Being the best at what we do www.smiths.com 21 Smiths Group plc Annual Results 2016