Smiths Group Shares Plummet Following FY24 Estimate Miss

Shares of Smiths Group experienced a decline on Tuesday after the release of its FY24 results, which fell short of key estimates.

As of 4:39 am (0839 GMT), Smiths Group shares were down 8.1%, trading at £1,672.

The company reported group sales of £3,132 million, slightly missing the consensus estimate of £3,149 million. EBITA came in at £526 million, 1.7% below the anticipated £535 million. Smiths Group’s operating margin was reported at 16.8%, also falling short of the expected 17.0%.

Despite these setbacks, the headline earnings per share (EPS) did exceed expectations, reaching 105.5p versus the consensus of 104.6p.

Performance across divisions was mixed; both the John Crane and Interconnect divisions missed their forecasts, while Detection managed a slight overachievement, driven by improved margins.

Analysts at RBC Capital Markets noted that the slight EBITA miss and potential downside risks to the 2025 consensus were somewhat offset by recent bolt-on acquisitions.

Looking ahead to FY25, the consensus estimates EBITA at £580 million, with anticipated organic growth of 5.8% and an operating margin of 17.5%. However, analysts cautioned that there is downside risk, particularly with the expected lower operating margins for FY25, which could be further affected by potential misses in growth targets.

The newly appointed CEO has implemented cost-saving measures aimed at achieving a 100 basis point improvement in margins by 2027. These initiatives include lean manufacturing practices and efficiency upgrades in shared support functions.

Analysts pointed out that while the FY margin miss and small consensus risks are present, the new cost plan reflects a commitment to improving margins—an area where progress has been limited in the past.