Results round-up: Smiths Group, AFC Energy

As it makes early progress with a new strategy, engineer Smiths Group reported improved revenues in the second quarter and an unchanged full year outlook.

For the first half of the year to 31 January, revenues of £1.6bn were flat on an underlying basis, having been down 3% in the first quarter, and thanks to the weak pound were up 18% on a reported basis.

The Detection division good growth in revenue and profit, offsetting declines at Smiths Medical and John Crane.

Management said this reinforced their view that the £493m acquisition of Morpho Detection, which was agreed almost a year ago, cleared by regulators in January and expected to complete "shortly", makes compelling sense and will increase Smiths' exposure to a growing market.

In tough energy markets, John Crane was fairly resilient, with a modest return to growth in the aftermarket, which now accounts for two-thirds of the division's revenue, but underlying revenue down 4%.

Smiths Medical had a weak first half, with sales down 2%, and performance at mid-restructuring Smiths Interconnect and Flex-Tek was in line with expectations, with underlying revenue down 1% and up 2% respectively.

With operating margins improving 130 basis points, operating profits increased 8% on an underlying basis and 27% at the statutory level to £277m and pre-tax profits by 10% and 31% to £248m.

Earnings per share leapt 30% to 45.7p and free cash flow by 44% to £252m, but the interim dividend was lifted just 2.3% to 13.55p.

AFC Energy

Industrial fuel cell power company AFC Energy announced its final results for the year to 31 October on Friday, narrowing its operating loss to £6.3m from £8.6m in 2015.

The AIM-traded firm managed to raise £3.6m through a placing and offer for subscription in January 2016, and held cash reserves at year-end of of £2.9m, up from £1.8m at the end of the prior financial year.

During the year, the company successfully commissioned its first industrial-scale 240kW fuel cell system, beginning the sale of power at Stade in Germany.

It also entered into a strategic technology collaboration with Industrie De Nora, described one of the largest manufacturers of electrolysers, electrodes, coatings and electrochemical solutions.

On the technical front, AFC said it made a “material improvement” in its fuel cell longevity and availability, and reduction of stack cost, through the Generation 2 fuel cell development programme.

It reportedly commenced commercial fuel cell deployment and detailed discussions with several international power utilities, industrial groups and government bodies, and entered into a strategic engineering partnership agreement with plantIng in support of fuel cell balance of plant engineering and design.

“2016 was an important year of consolidation for the company with material improvements not only in the fuel cell technology platform, but also in the dialogue with several key commercial and strategic partners for AFC Energy,” said CEO Adam Bond.

“The corporate value gained from AFC Energy's collaboration with De Nora, and the commencement of commercial project developments with Peel Environmental, cannot be undervalued and positions the company well for an accelerated programme of activities in 2017.”

The company had been busy since the year ended as well, reporting the successful completion of the Generation 2 fuel cell system, and the strategic partnership with Peel Environmental mentioned by Bond to assess the techno-economic feasibility for fuel cell deployment in the UK's ‘Northern Powerhouse’.