Results round-up

Smiths Group posted a drop in profits for the year to the end of July as its John Crane division suffered amid tough conditions in the global energy markets, but the results were still better than expected.

Reported pre-tax profit fell 2% to £451m on revenue of £2.95bn, up 2% on a reported basis but down 2% on an underlying basis. Statutory pre-tax profit, meanwhile, rose to £346m from £325m.

The board recommended a final dividend per share of 28.75 pence, giving a total dividend for the year of 42p, up 2.4% year-on-year.

Smiths said its John Crane oil services division experienced tough trading conditions as volatility in the global energy markets continued to reduce demand. Revenue in Smiths Interconnect and Flex-Tek was slightly down on the prior year on an underlying basis. On a reported basis, group revenue grew 2%, benefitting from foreign exchange, and in particular the strength of the US dollar.

Chief executive Andy Reynolds Smith said: “Smiths Group delivered a robust performance this year. We achieved good growth in headline operating profits with associated margin expansion in our Medical, Detection and Interconnect divisions, driven by revenue growth and business improvement initiatives.

"However, significant headwinds in the global energy markets impacted John Crane, primarily in the sales of first-fit equipment; aftermarket was more resilient with underlying revenue down 4%. For Smiths Group as a whole, more than half of our revenue continued to come from the recurring aftermarket for our products and services.”

The company said it expects a broad continuation of the trends experienced in 2016, with ongoing challenges in John Crane’s end markets offset by moderate underlying revenue growth in its other divisions.

Motorist support organisation AA posted its interim results for the six months to 31 July on Wednesday, with trading revenue up 2% to £467m.

The FTSE 250 firm’s board said that was a result of a strong performance from Roadside Assistance, with growth in paid personal member numbers for the last three months of the period, which continued into August and September.

Group trading EBITDA for the period was flat at £192m, reflecting the increased costs associated with the higher number of breakdowns in the period which the board said was in part driven by greater awareness of the service achieved by the marketing campaign.

Operating profit remained flat at £132m, as a result of higher share based charges partially offset by a lower level of exceptional items, with profit before tax up £117m to £48m due to the absence of refinancing payments that impacted the prior year's results.

Adjusted earnings per share rose 2% to 10.3p, and cash conversion before exceptional items was 99%, lower than last year due to the relative timing of working capital movements.

Net debt was £2.81bn at period end, and after adjusting net debt and EBITDA for the disposal of AA Ireland in August, a figure of £2.68bn represented leverage of 6.7x EBITDA.

The board recommended a dividend increased to 3.6p per share, which it said reflected the progress made in the transformation, as well as its progressive dividend policy.

It explained that of the £130m net proceeds from the sale of AA Ireland, £106m has been used for partial repayment of the Senior Term Facility which incurs no penalties for early payments.

“We are extremely encouraged by the reversal of the decline in paid personal members over the last few months, said executive chairman Bob Mackenzie.

“The marketing strategy is achieving a significant impact on new business, and we are continuing to improve customer experience through digital innovation.”

Mackenzie said now that the board was looking at the second year of the transformation of the AA, the investment it was making in technology remained on track.