Smiths Group reported continued progress in its interim results on Friday, with record growth and an increase in its guidance.
The FTSE 100 company’s revenue increased 25.6% year-on-year in the six months to 31 January, to £1.5bn, while its operating profit grew 27.4% to £241m.
Its operating profit margin also increased, by 20 basis points to 16.1%.
The firm’s basic earnings per share were ahead 52.1% to 46.6p, while its return on capital employed increased 120 basis points to 15.2%.
Smiths said its growth reached record levels, with organic revenue rising 13.5% and reported revenue jumping 25.6%.
That made for the seventh consecutive quarter of growth, with positive performance across all divisions, geographic regions, and major customer end markets.
The company attributed 200-basis points of growth to new product launches, with a 13.5% increase in research and development to support future as well as current growth.
Its ‘Smiths Excellence System’ (SES) was delivering benefits, the board said, contributing £5m to operating profit, scaling to £12m for the full financial year.
The firm said it was now expanding the programme with additional resources.
Operating cash conversion was 63%, which the company put down to continued investment to secure supply and support sustainable growth.
The company described a strong balance sheet, with net debt-to-EBITDA at 0.8x.
Its share buyback was almost 90% complete, with the board proposing an interim dividend of 12.9p, making for a 5% increase.
Smiths Group raised its guidance for the 2023 financial year as a result of the interim performance, to at least 8% organic revenue growth, with a “moderate” margin improvement.
“We continued to improve our performance in the first half, delivering double digit revenue and earnings growth.
“While we are still in the early days of executing our plan, we are pleased with the progress. I congratulate and thank my 15,000 colleagues around the world for continuing to do what we do best – improving our world through smarter engineering.
“With order books healthy and trading strong, we are again raising our 2023 organic revenue growth guidance to at least 8%, with moderate margin improvement.”
Reporting by Josh White for Sharecast.com.
