Engineering conglomerate Smiths (SMIN) finds itself in a rather peculiar situation. The Covid-19 pandemic is driving uncertainty across much of its operations, but has created the perfect conditions for its medical business, architect of the now sought-after paraPac ventilator. Unfortunately, the Smiths Medical division is currently classified as discontinued pending a demerger that has been put on hold.
The six months to 31 January saw underlying revenue from continuing operations rise 3 per cent, with last year’s acquisition of United Flexible propelling the remaining top line growth. While continuing operating profit increased by 6 per cent to £186m, the margin contracted by 0.3 percentage points to 15 per cent, led by a decline in the ‘interconnect’ business.
John Crane is the largest segment, making components primarily for the energy industry. Revenue rose 6 per cent in the first half to £474m. Around 50 per cent of sales come from the oil and gas sector and while it is not involved in upstream activities, the oil price collapse is still likely to force customers to curtail spending. As a supplier to the aerospace industry, ‘Flex-Tek’ is vulnerable to airlines grounding their fleets and ordering fewer new planes.
| SMITHS (SMIN) | ||||
| ORD PRICE: | 1,203p | MARKET VALUE: | £ 4.8bn | |
| TOUCH: | 1,204-1,202p | 12-MONTH HIGH: | 1,779p | LOW: 790p |
| DIVIDEND YIELD: | 2.6% | PE RATIO: | 49 | |
| NET ASSET VALUE: | 560p* | NET DEBT: | 56%** | |
| Half-year to 31 Jan | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2019*** | 1.14 | 89 | 13.4 | 14.1 |
| 2020 | 1.24 | 46 | 2.8 | nil |
| % change | +8 | -48 | -79 | - |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes £1.56bn in intangible assets or 394p a share, **Includes £93m in lease liabilities, ***Restated | ||||
