Life hasn't been rosy for Smiths Group (SMIN) of late. Shares in the engineering giant steadily fell through most of 2014, following a series of poor results, and then tanked when the price of oil went south, finishing the year among the worst performers in their large-cap peer group. We believe 2015 could continue to prove torrid for shareholders.
- Shares have already derated considerably
- Strong dollar a plus
- Management uncertainty
- Opportunity to create value through break-up has passed
- Low oil price detrimental to strongest division
- Core medical and detection arms still in decline
- Liabilities limit strategic options
Alongside a host of other issues, Smiths now finds itself in a position of management uncertainty. This month, chief executive Philip Bowman announced plans to retire at the end of 2015, joining the group's finance director, who is due to leave early this year. Given the lack of momentum over recent years a change in leadership could be seen as positive, but it also means that the widely discussed and required break-up will probably not occur until a new boss is installed.