Latest news with #SmithsInterconnect
Yahoo
26-03-2025
- Business
- Yahoo
Smiths Group PLC (SMGKF) (H1 2025) Earnings Call Highlights: Strong Organic Growth and ...
Organic Revenue Growth: 9.1%, including acquisitions increased to 10.2%. Reported Revenue Growth: 6.7%, impacted by adverse foreign exchange. Operating Profit Growth: 12.6% organic, 9.5% reported, with a margin expansion of 40 basis points to 16.7%. EPS Growth: 14%, enhanced by lower tax, interest charges, and share buyback program. Cash Conversion: 94%. Return on Capital Employed: 17.1%. Dividend Increase: 5% to 14.23p. Share Buyback Program: Increased to GBP500 million. Free Cash Flow: GBP143 million, up nearly 30% from last year. John Crane Organic Revenue Growth: 3.8%. Flex-Tek Organic Revenue Growth: 2.5%, with acquisitions adding 4.4%. Smiths Detection Organic Revenue Growth: 15.3%. Smiths Interconnect Organic Revenue Growth: 26.8%. Full-Year CapEx Expectation: Around GBP100 million. Acquisition of Duc-Pac Corporation: GBP32 million at 7.2 times EBITDA. Warning! GuruFocus has detected 6 Warning Sign with SMGKF. Release Date: March 25, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Smiths Group PLC (SMGKF) reported strong financial performance with organic revenue growth of 9.1% and operating profit growth of 12.6% on an organic basis. The company increased its dividend by 5% and expanded its share buyback program to GBP500 million, enhancing shareholder returns. Smiths Detection and Smiths Interconnect showed significant growth, with Detection's revenue increasing by 15.3% organically and Interconnect's revenue growing by 26.8%. The company is executing a strategic plan to focus on high-performance technologies, which includes the separation of Smiths Interconnect and Smiths Detection to unlock value. Smiths Group PLC (SMGKF) reaffirmed its fiscal-year '25 guidance, which has been raised twice since last September, indicating confidence in future performance. The company experienced a cybersecurity incident in January, impacting John Crane's performance and causing a 1% to 2% reduction in growth for the division. Adverse foreign exchange effects led to a lower reported revenue growth of 6.7%, compared to the organic growth rate. The mix of business and product lines led to a 60 basis point contraction in margins, particularly affecting John Crane and Flex-Tek. The US construction market remains uncertain, affecting Flex-Tek's growth outlook, with new housing permits and starts showing declines. The separation process for Smiths Interconnect and Smiths Detection involves complexities and potential costs, with the company needing to ensure a smooth transition. Q: Can you quantify the impact of the cyber incident on John Crane and discuss the recovery outlook? A: Roland Carter, CEO: The cyber incident impacted John Crane significantly, reducing growth by 1% to 2%. We expect a stronger second half as recovery progresses, but it will take time due to the vertically integrated nature of the business. Aftermarket recovery is underway, and we anticipate improved performance in H2. Q: What are the plans for the demerger or sale of Smiths Detection and Smiths Interconnect? A: Roland Carter, CEO: We aim to announce the sale of Smiths Interconnect by the end of the calendar year, with Smiths Detection to follow. We are open to both demerger and sale options, focusing on value creation. The processes are on track with governance and advisory structures in place. Q: How do you view the growth assumptions for FutureSmiths, and what are the margin improvement prospects? A: Roland Carter, CEO: We target a 5% to 7% organic revenue growth and a 21% to 23% margin. Both John Crane and Flex-Tek have opportunities for margin expansion through pricing, efficiency, and innovation. The focus on these businesses will drive technical and commercial advancements. Q: Can you elaborate on the performance and outlook for Flex-Tek, especially in the industrial segment? A: Roland Carter, CEO: Flex-Tek's industrial segment grew 2% despite a subdued construction market. We expect stronger growth in H2, driven by industrial heat and aerospace segments. The US housing market recovery will be a key driver, and we are well-positioned to capitalize on it. Q: What is the sustainability of the Interconnect margin, and how are you managing US tariffs? A: Julian Fagge, CFO: Interconnect's margin performance was strong, and we expect it to remain robust in the second half. Regarding US tariffs, our local-for-local approach mitigates impacts, and we have plans to address any changes in the tariff landscape. Q: How is the semiconductor segment performing within Interconnect, and what is the visibility on future growth? A: Julian Fagge, CFO: The semiconductor segment, particularly in high-performance GPUs and AI, performed strongly. Although the market is short-cycle, underlying conditions remain positive, and we are well-positioned with our advanced technology offerings. Q: What is the status of the M&A pipeline, and how are you managing capacity for acquisitions amid other initiatives? A: Roland Carter, CEO: We have a focused pipeline for bolt-on acquisitions, particularly in Flex-Tek and John Crane. Dedicated teams manage these acquisitions, ensuring we maintain capacity for strategic initiatives like demergers and the acceleration program. Q: Can you provide an update on the divestment process for Interconnect and Detection? A: Julian Fagge, CFO: The divestment process is proceeding as planned, with strong interest expected. We are confident in executing the transactions as committed, focusing on maximizing value. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus. Sign in to access your portfolio
Wall Street Journal
31-01-2025
- Business
- Wall Street Journal
Smiths Group to Spin Off or Sell Detection Business; Return up to 850 Million Pounds
Smiths Group SMIN 11.64%increase; green up pointing triangle is planning to spin off or sell its detection business and return up to 850 million pounds ($1.06 billion) to shareholders. The FTSE-100 listed engineering group said Friday that it will also sell Smiths Interconnect by the end of this year as part of a plan to focus on the John Crane and Flex-Tek businesses.
The Independent
31-01-2025
- Business
- The Independent
Industrial giant Smiths Group bows to investor calls for break-up
Bosses at engineering conglomerate Smiths Group are plotting to break up the FTSE 100 business, following calls from investors. The London-listed firm is to sell its Smiths Interconnect business, which makes broadband connection and antenna parts, by the end of 2025. It will hive off its Smiths Detection business, which makes X-ray machines for airports, it said on Friday. Smiths is among the UK's biggest industrial firms, with four companies stretching across continents and industries. It makes parts for the energy, aviation, aerospace, construction, automotive and semiconductor sectors among others, employing 15,000 people across 50 countries. But it has come under pressure to sell off parts of its business by US investment group Engine Capital. Engine is reported to have a stake of about 2% in Smiths. It wrote earlier in January that the blue-chip firm's share price could be worth about 60% more if it sold off parts of the business. Smiths will instead focus on its John Crane subsidiary, which makes seals and parts for heavy industries, and its Flex-Tek business, which makes heating elements. Roland Carter, who became Smiths' chief executive in March, said: 'We are pleased with the financial and operating performance of the group over recent years, including the recent upgrade to earnings. He said bosses had spent 'considerable time evaluating the options to maximise shareholder value' and address what he called a 'significant discount' to its shares. Mr Carter added: 'We are conscious of the impact of making such changes to our people and will do so in a manner that is respectful to our employees, our customers and our suppliers and in the long-term interests of all our stakeholders.' The company also said it will buy shares worth about £500 million back from shareholders, in a bid to boost returns to investors further.
