Slow progress at Smiths

The impact of cost savings was most obvious in the detection unit, which designs sensors to identify explosives and drugs. Revenue fell 9 per cent due to weak demand from ports and borders and constrained defence budgets. But without last year's £30m in one-off costs and with efficiency measures introduced, adjusted operating profit more than doubled to £55m.

The key contributor to top-line growth, meanwhile, was the medical devices business. Revenue grew 4 per cent to £836m - 29 per cent of the group total - as problems at a competitor stimulated sales of Smiths' infusion systems for drug delivery. The business is also in the midst of a restructuring programme, which included closing its Rossendale and Rockland manufacturing facilities. Management expects this programme to deliver £23m in savings by July 2017.

Smiths' other large business is John Crane, a Chicago-based provider of seals, filtration systems and the like to oil rigs. After a resilient first half, John Crane was predictably held back during the latter part of the year by delays to oil and gas projects, so sales were down 4 per cent overall at the end of the year. Management stressed that more resilient after-market revenues grew by 4 per cent, driven by strong refinery demand, to account for more than half the divisional total.

Less progress was made at the interconnect business, where margins declined across all three operating areas - microwave, power and connector. In particular, revenue at its microwave unit fell by a fifth, with much of the decline attributable to a single customer. However, management expects margins to stabilise this year, as restructuring benefits outweigh pricing pressure and cost inflation.

Brokerage Numis downgraded its forecasts and now expects EPS of 83.2p during the year to July 2016 (Down from 85p for FY2015).