Half year results for 6 months ended 31 January 2024

Smiths Group plc – Half Year Results for 6 months ended 31 January 2024

+3.9% organic revenue growth and +16.5% order growth in H1; reaffirming full-year guidance of 4-6% organic revenue growth

Pioneers of progress – improving our world through smarter engineering

Solid first half performance with good momentum for the second half

• Organic revenue growth¹ of +3.9% against record comparator, led by strong growth at John Crane +12.7% and Smiths Detection +8.9%
• Revenue declines at Flex-Tek of (4.1)% and Smiths Interconnect of (13.7)%; with improved performance in the second quarter in both divisions
• Group orders² up +16.5%, driven by John Crane +10.9%, Smiths Detection +38.2% and Flex-Tek aerospace +11.6%; double-digit order growth at Smiths Interconnect in Q2, following a double-digit decline in Q1

Commercial wins underpinning full-year guidance and future growth

• Continued improvement in demand for John Crane’s solutions supporting energy security and energy transition, including wins across carbon capture, blue hydrogen and battery manufacturing
• Smiths Detection secures multiple next-generation CTiX platform contracts globally; an award from the US DOD to supply portable aerosol and vapour chemical detectors and an initial £88m contract with the UK MoD to provide chemical detection technology

Execution focus driving performance improvements; SES delivering further tangible benefits

• Headline organic operating profit³ +5.3%; headline operating margin³ expansion of +20bps to 16.3%, alongside reinvestment for growth
• ROCE⁴ up +50bps to 15.7%, driven by the profit improvement
• SES benefit of £10m; on track for full-year contribution of £20m
• Cash conversion⁴ up 26 percentage points year-on-year to 89%, resulting from working capital improvement; free cash-flow more than doubled to £112m

Strong balance sheet supports investment in organic and inorganic growth

• Net debt to EBITDA⁴ of 0.9x
• Acquisition of Heating & Cooling Products for <7x EBITDA; integration progressing ahead of plan
• Interim dividend of 13.55p, up 5.0%
• New £100m share buyback programme announced, with first tranche of up to £50m to be completed by the end of September 2024

Roland Carter appointed as the Group’s Chief Executive Officer, with immediate effect, following Paul Keel’s decision to step down to take on a new role as chief executive of a US public company

FY2024 Outlook

• Reaffirming FY2024 organic revenue growth within our medium-term target range of 4-6%, with continued margin expansion

Paul Keel, Chief Executive Officer, commented:

“We are off to a good start in FY24 with +3.9% organic revenue growth and +16.5% order growth in the first half, against a record comparator last year, and marking our 11th consecutive quarter of revenue growth.

“We continue to focus on innovation as an enduring driver of value, as highlighted through the roll-out of our next-generation threat detection technology in airports around the world. We also continue to strengthen our energy transition impact, with significant project wins in carbon capture, blue hydrogen and electric battery manufacturing.

“We expect growth to improve in the second half, driven by a record order book for Smiths Group, continued strength in end markets like aerospace, security and energy, as well as gradually improving conditions in the industrial segments that were softer in the first half. Together, this gives us confidence in reaffirming our full-year 2024 guidance of 4-6% organic revenue growth, with continued margin expansion.

“As we continually advance our Purpose of improving our world through smarter engineering, we are pleased to announce that the Smiths Group Foundation is now awarding its first set of grants to charities which are aligned with our Purpose.

“Thank you to my colleagues around the world for all you do. It has been a tremendous honour to have led this wonderful company over the past three years, working alongside our many talented employees, and I am proud of everything we have achieved together. I'm excited for what lies ahead for Smiths and to see Roland continue to build on its successes and deliver further value for all Smiths Group’s stakeholders.”

Upcoming Events

Statutory reporting

Statutory reporting takes account of all items excluded from headline performance.
See accounting policies for an explanation of the presentation of results and note 3 to the financial statements for an analysis of non-headline items.

Definitions

The following definitions are applied throughout the financial report:
¹ Organic is headline adjusted to exclude the effects of foreign exchange and acquisitions.
² Order intake growth excludes the effects of foreign exchange.
³ Headline: In addition to statutory reporting, the Group reports on a headline basis. Definitions of headline metrics, and information about the adjustments to statutory measures, are provided in note 3 to the financial statements.
⁴ Alternative Performance Measures (“APMs”) and Key Performance Indicators (“KPIs”) are defined in note 19 to the financial statements.

View the full press release

Investor enquiries

Siobhán Andrews, Smiths Group
+44 (0)7920 230093
siobhan.andrews@smiths.com

Media enquiries

Tom Steiner, Smiths Group
+44 (0) 7787 415891
tom.steiner@smiths.com

Alex Le May, FTI Consulting
+44 (0)7702 443312
smiths@fticonsulting.com

Presentation

The webcast presentation and Q&A will begin at 08.30 (UK time) today at:
https://smiths.com/investors/results-reports-and-presentations. A recording will be available from 13.00 (UK time).

Legal Entity Identifier (LEI): 213800MJL6IPZS3ASA11

This document contains certain statements that are forward-looking statements. They appear in a number of places throughout this document and include statements regarding the intentions, beliefs and/or current expectations of Smiths Group plc (the “Company”) and its subsidiaries (together, the “Group”) and those of their respective officers, directors and employees concerning, amongst other things, the results of operations, financial condition, liquidity, prospects, growth, strategies, and the businesses operated by the Group. By their nature, these statements involve uncertainty since future events and circumstances can cause results and developments to differ materially from those anticipated. The forward-looking statements reflect knowledge and information available at the date of preparation of this document and, unless otherwise required by applicable law, the Company undertakes no obligation to update or revise these forward-looking statements. The Company and its directors accept no liability to third parties. This document contains brands that are trademarks and are registered and/or otherwise protected in accordance with applicable law.