The share price of Smiths Group (LSE: SMIN) is currently down 1.3% in trading so far today, following publication of a trading statement ahead of the company’s one hundredth Annual General Meeting, being held in London today.
Smiths Group says it will report that both underlying revenue and headline operating profit fell, as expected, in the three months to 1 November 2014 compared with the first quarter last year.
The falls are due to growth in Smiths Medical being more than offset by declines in both Smiths Detection and Smiths Interconnect, with revenues and headline operating profit in the group’s John Crane business remaining broadly similar to last year’s first quarter.
The company said that growth in Smiths Medical was driven by strong demand for infusion pumps and by improving performance in its vital care business, particularly respiratory and tracheostomy products
However, continued constraints on government spending mean that Smiths Detection is still experiencing challenging trading conditions across most of its markets. And a combination of spending delays by wireless telecoms customers, revenue from some test equipment orders benefiting the prior year owing to timing issues and continued softness in some end markets resulted in declines in revenue and headline operating profit at Smiths Interconnect.
The group’s Flex-Tek business — a provider of components that heat and move fluids and gases for the aerospace, medical, industrial, construction and domestic appliance markets — has reported a modest increase in underlying revenue. Growth in the Fluid Management division was driven by sales of automotive components, while Heat Solutions benefited from increased sales of speciality heating elements.
Smiths Group said that expectations for the year remain in line with the outlook given at the full year results, with currency exchange and transactions anticipated to have an adverse impact of around 3% on operating profit in the first half.
However, the company also said that this situation will reverse in the second half if current exchange rates are maintained, and that underlying performance will be weighted towards the second half.
At 1,218p, Smiths Group share price is down 15% on this time last year, in which time the FTSE 100 has stayed essentially flat. And over the past five years Smiths Group has only managed to match the index’s 26.5% increase.
