Highlights
Commercial market gains but challenging healthcare and homeland security markets
John Crane, Smiths Interconnect and Flex-Tek increased underlying revenue and margins
Smiths Medical returned to growth in H2 with improvement in infusion pumps
Smiths Detection margins under pressure with tough trading and additional charges
Fuel for Growth restructuring programme delivered £10m of savings
FX impact of £43m on operating profit: translation of £27m and transaction of £16m
Company-funded investment in new products up 5% underlying to £109m
Headline operating cash conversion at 97%; dividend up 2%
"Underlying revenue and margins rose in John Crane, Smiths Interconnect and Flex-Tek but were offset by declines in Smiths Medical and Smiths Detection. Smiths Medical saw revenue grow in the second half driven by good growth in its infusion franchise. Smiths Detection's performance was disappointing with a difficult trading environment and one-off charges of £30m in the year. Our overall results were significantly reduced by foreign exchange headwinds.
"Our strategy remains to accelerate medium-term growth and reposition the business through consistent investment in product innovation, sales effectiveness, and expansion in higher growth markets. This investment is funded by our Fuel for Growth programme, scheduled to generate £60m of annual savings by 2017 with initiatives underway across all divisions.
"Looking ahead, we remain well-placed to benefit from growth in energy demand, the need for new fuel-efficient aircraft, increased US residential construction and investment in wireless networks. However, we remain cautious about sectors such as healthcare, homeland security and defence, which are subject to government funding constraints, although there are signs that the defence market is beginning to stabilise."
