A pension shake-up and better than expected trading in the past three months combined to trigger Smiths Group’s (SMIN) biggest one-day share price gain in seven years.
Investors were particularly buoyed by news that the engineering conglomerate has agreed a deal to pay less into its legacy UK pension scheme, bringing total annual contributions down from £60m this year to £24m by 2017. Management said this would increase free cash flow by £36m a year, underpinning the group’s ability to invest and continue growing dividends.
Trading in the three months to 1 November wasn’t too shabby either. True, John Crane continued to feel the pain of weak oil and gas markets. But a 4 per cent dip in underlying revenue and stable operating margins shows that growth in detection and steady progress in other divisions is pitching in to help curb those losses.
As the oil price remains in the doldrums, Broker JPMorgan Cazenove opted to cut its forecast adjusted EPS for the year to July 2016 by 3 per cent to 82.6p.
