Smiths Group Reports Record FY Sales, Expects Further Increases

FTSE 100 engineering business Smith’s Group has predicted further sales and margin growth as it posted above-forecast results for the last financial year.

At £16.68 per share, Smith Group’s share price was fractionally higher in Tuesday business.

Organic revenues rose 11.6% during the 12 months to July to a record £3 billion, it said. Sales growth was drive by a balance of price hikes and volumes increases, while the launch of new products accounted for 3.1% of reported growth.

Operating profit margins increased 10 basis points organically over the period, to 16.5%. Operating profit on the same basis rose 12.7% to £501 million.

Operating cash conversion improved to 86% from 80% the year before, though net debt more than doubled to £387 million from £150 million.

Smith’s Group lifted the full-year dividend 5.1% year on year, to 41.6p per share.

Green Machine

Sales growth was strongest at its Energy division last year thanks to the ongoing green transition. On an organic basis turnover here increased 19.5% year on year.

Smiths Group said that “an increased focus on energy security and higher demand for energy efficiency and emissions reduction solutions” drove Energy sales northwards during the period.

Energy-related sales through its John Crane subsidiary has been boosted by the decarbonisation agenda, with customers seeking to make their operations more energy efficient, and increasing investment in new facilities for low-carbon energy.

At its core General Industrial unit, sales rose by 7.8% from financial 2022 thanks to “strong demand for John Crane’s industrial products in chemical processing, water treatment and life sciences,” Smiths Group said.

John Crane sells mechanical seals, power transmission couplings, and filtration systems fora range of industries including oil and gas, power generation, chemicals and pharmaceuticals.

“Strong Year of Progress”

Chief executive Paul Keel commented that “we had another strong year of progress in fiscal 2023 as we further accelerated our growth, sharpened our execution, and developed our talented people.”

Keel said that the company is spending on R&D to capitalise on the growing use of artificial intelligence (AI) and other digital technologies. He added that “we are also further building our capabilities to capitalise on the growing megatrends we are exposed to across the major markets we serve, including energy transition and the world’s ever-increasing need for better security.”

For this financial year, Keel said he expects the company to grow organic revenues between 4% and 6%, in line with its medium-term target.