Smiths Group reports 3.9% increase in organic revenue in 2023

LONDON, UK: Smiths Group PLC, a leader in engineering innovation, has announced a solid half-year performance with a notable 3.9% increase in organic revenue and a 16.5% surge in orders for the first half of the fiscal year ending January 31, 2024. The company remains confident in achieving its full-year organic revenue growth target of 4-6%.

The growth was primarily driven by John Crane and Smiths Detection, which saw revenue increases of 12.7% and 8.9%, respectively. Despite revenue declines in Flex-Tek and Smiths Interconnect, the company experienced a rebound in the second quarter, contributing to the overall positive outcome.

Smiths Group’s commitment to energy security and transition is evident in John Crane’s continued demand, with significant contracts secured for carbon capture, blue hydrogen, and battery manufacturing solutions. Smiths Detection also made strides by securing multiple contracts for its next-generation CTiX platform, a deal with the US Department of Defense, and an £88 million contract with the UK Ministry of Defence.

Financially, the company reported a 5.3% increase in headline organic operating profit and a 20 basis points expansion in headline operating margin to 16.3%. Return on capital employed (ROCE) improved by 50 basis points to 15.7%, and the Smiths Excellence System (SES) contributed £10 million in benefits, with expectations to double by year-end.

The company’s strong balance sheet has enabled continued investment in growth, both organically and through acquisitions, such as the recent purchase of Heating & Cooling Products. Smiths Group also announced a new £100 million share buyback program, with the first £50 million tranche to be completed by September 2024.

In executive news, Roland Carter has been appointed as the new Chief Executive Officer following Paul Keel’s departure to lead a US public company.

Looking ahead, Smiths Group PLC reaffirms its FY2024 outlook, expecting to maintain organic revenue growth within the 4-6% range and to continue 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.”

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