Overall profits slid -8.5% for the 6 months ended Jan. 31 to $197.5 million (£140 million), or 46¢ per share (£0.325). Sales were down -3.1% to $19.84 billion (£1.37 billion) compared with the 1st half of fiscal 2014.
Although adjusted operating profits fell -6% to £217 million ($306.2 million), Smiths Group still topped analysts’ consensus expectation of £209.75 million.
Adjusted operating profits at John Crane tumbled +26% to £78 million, on a -13% top-line slide to to £393 million, hurt by lower demand from oil and gas clients. Oil companies across the globe have slashed capital expenditure and put projects on hold as they try to live out a drastic fall in crude oil prices.
At Smiths Medical, adjusted operating profits grew 7.7% to $118.5 million (£84 million), on sales growth of 1.2% to $579.9 million (£411 million).
“From a trading perspective, this is a solid set of results. Group performance in the 1st 6 months of the year demonstrated the benefits of our range of end market exposures. As expected, John Crane was down in the 1st half, in persistently tough oil and gas end markets, but we benefited from growth in profits at Smiths Medical and Smiths Detection. Good progress has been made to improve Smiths Detection’s competitive positioning through initiatives on value engineering, programme management and aftermarket servicing, which are clearly having a positive impact on the bottom line. Against a tough prior year comparator, Smiths Medical delivered another strong performance as it benefited from consumables sales for its expanded installed base of infusion pumps. Performance at Smiths Interconnect and Flex-Tek was in line with expectations,” CEO Andy Reynolds Smith said in prepared remarks.
“As previously stated, Group performance is anticipated to be slightly more weighted to the second half than usual. We expect global energy markets to remain challenging in the 2nd half of the year, and are taking action to ensure that John Crane remains well positioned in an uncertain environment. I expect Smiths Medical to deliver a similar revenue performance in the 2nd half, driven by growth in infusion systems and vital care. Smiths Medical’s margins should benefit further from the effect of operational efficiencies and restructuring actions. Smiths Detection’s strong order book underpins anticipated higher levels of sales growth in the second half, although the margins seen in the first half will moderate somewhat given contract mix and investment in new business capabilities. Our expectations for the full year remain unchanged,” Reynolds Smith said.
($1 = £0.7087)
Material from Reuters was used in this report.