Smiths has released strong H1’23 results; key highlights include record growth driven by volume/pricing/new products, 63% cash conversion reflects higher working capital plus seasonal patterns, FY23 guidance increased again.
Results summary
H1 group revenues grew by 25.6% (+13.5% organic) to £1,497m, driven by all divisions and regions.
Divisionally; John Crane revenues grew 24.6% to £519m (+14.6% organic), Detection by 24.8% to £390m (+14.0% organic), Flex-Tek by +33.2% to £395m (+17.0% organic) and Interconnect by +16.2% to £193m (+3.3% organic).
The adjusted operating profit margin expanded by 20bps to 16.1% giving adjusted operating profit of £241m, an increase of 27.4% (+12.7% organic).
EPS increased by 52.1% to 46.6p and an interim dividend of 12.9p is a 5% increase y-o-y.
Net debt was £429m (FY22 £150.0m), which is a net debt/EBITDA ratio of 0.8x.
ROCE expanded by 120bps to 15.2%.
Outlook
Management is raising FY23 guidance to at least 8% organic revenue growth (this was guided at 7% on 18 January 2023 and originally set at 4-4.5% with FY22 results on 23 September 2022), whilst maintaining its ‘moderate margin improvement’ guidance.
This guidance suggests modest upward pressure to consensus forecasts.
The £742m share buyback programme is now c90% complete with remainder expected within FY23.
