Smiths Group supported by diversification of business streams in full year results

With the interim dividend being paid alongside the final dividend, is an encouraging sign for investors

Article updated: 24 September 2020 11:00am Author: Helal Miah

  • Full year revenues reported at £2,548m, an underlying fall of just 1% YoY
  • Supported by strong performance in the John Crane oil services business, while FlexTek suffered from lower pandemic activity
  • The Group expects to pay its delayed interim dividend alongside the final dividend, in an encouraging sign for investors

The industrial conglomerate Smiths Group reported full year results to the end of July this morning, with the latter part of its financial year experiencing significant impact as a result of the global pandemic.

During the first half, revenues grew by 3% but fell during the second half by 4%, leaving full year revenues to come in at £2,548m, an underlying fall of just 1%. Management described this performance as robust. A strong performance in the first half by its oil services business, John Crane, saw full year growth of 2% on an underlying basis. Its Detection business was flat over the year as the first half performance was offset by lower service and maintenance levels due to Covid-19, as fewer passengers travelled through airports. The FlexTek business suffered from lower activity in aerospace leaving full year revenues down by 5%. Its Interconnect business, however, was already experiencing slowdown before the pandemic, but activity spiked in the second half as demand for improved communications by various industries rose, leaving overall revenues to fall by 5%. Its Medical unit, which is being separated, did well during the year especially as the demand for ventilators rose.

With costs of Covid-19 and some write-downs, the group reported profits for the year of £338m, down 12%. Further, free-cash flows improved to £273m, an increase of 17%. The delayed interim dividend will be paid alongside the final dividend, though in total they will be 24% lower than the previous financial year. The overall business will still face a tough time going forward, which is why management still will not give full year guidance. That said, trading in the first few months of the new financial year has seen group revenues fall by 5%, still resilient compared to other businesses and industries.

The diversification benefits that come from investing in a conglomerate are being delivered under the Smiths Group structure. The shares are down 6% this morning as earnings did fall short of expectations but have recovered well since the lows in March. The diversity and the resilient performance, along with a dividend, encourages us to keep the shares on our Buy list, as we believe they offer good long-term prospects at a good price.

All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to To understand how our Investment research team arrive at their views please read our Investment Research Policy.

Helal Miah portrait photo
Helal Miah

Investment Research Analyst

After graduating with an economics degree from University College London, Helal started his career within private banking at Smith & Williamson Investment Management and later held analyst and fund manager roles with the Industrial Bank of Japan, Schroders and Mitsubishi Corporation. He is a chartered fellow of the Chartered Institute for Securities & Investment.