Smiths' divi up as profits soar

SHAREHOLDERS in industrial giant Smiths Group cheered today as the company lifted its half-year payout for the first time in four years amid a resurgence in global activity.

Reporting interim profits of £155m, up 16% on last year, the company said dividend payments would rise by 6% to 9¼p.

The hi-tech aerospace to medical systems group said it expects its momentum to continue into the second half of the year, predicting strong full-year trading.

Chief executive Keith Butler-Wheelhouse said: 'With all four divisions performing well, Smiths is achieving real underlying growth and gaining the incremental benefit of recent acquisitions.'

All four divisions of the group achieved increased sales and profits, with the aerospace and military divisions performing particularly well.

Aerospace reported a 17% increase in sales to £514m, largely due to the recovery in confidence among commercial airlines leading to increased order books for both Boeing and Airbus.

The military part of the business also continued to perform strongly and helped the division to lift profits by £6m to £39m.

Margins at Smiths Medical were the best in the group at 17%, steady on a year ago, and the company said it expects to complete its takeover of privately-owned medical products firm Medex Holdings. The takeover gives Smiths 21 facilities in the US, but several of these are expected to close, Butler-Wheelhouse said.

'I doubt that some years from now we'll still be running 21 in the US,' he said. He declined to speculate on the impact this move might have on jobs at Medex's 2,000-strong workforce. At Smiths Detection, meanwhile, sales were up 10% to £153m, with aviation security accounting for around one third of the business.

Despite the positive trading statement, shares fell back 4p to 838p in early morning trading as analysts gave a subdued reaction to the results. Merrill Lynch said that although pre-tax profits were ahead of expectations, operating profits had not met targets, adding that the company was the most expensive stock of its sector in the European markets.

Smiths made £61m worth of acquisitions during the period and has added US Seal to its portfolio of companies today in a deal worth $11.8m.

Butler-Wheelhouse said: 'Smiths is building on its strong market positions, benefiting from investment in new product R&D, productivity gains and recent acquisitions. With broadly favourable market environments, Smiths is capitalising on available opportunities to generate continuing growth.'