Smiths Group (SMIN) Investor Update summary

Strategic repositioning and portfolio actions

• Executed sale of Interconnect and Detection businesses for GBP 3.3 billion, exceeding market expectations and accelerating portfolio focus on John Crane and Flex-Tek.

• Proceeds fund a GBP 1 billion share buyback (Interconnect) and a planned GBP 1.5 billion return (Detection) via tender offer/special dividend and further buybacks through 2027.

• Portfolio now focused on high-performance flow control and thermal solutions, targeting higher growth and returns.

Growth strategy and market positioning

• Organic revenue growth target set at 5%-7%, with EPS growth above 10% and operating margin of 21%-23%.

• Growth driven by innovation, operational excellence, targeted acquisitions, and expansion into high-growth adjacencies.

• Recent acquisitions, such as DRC, expand Flex-Tek’s industrial heat portfolio and address data center and power backup markets.

• John Crane leverages energy transition trends (hydrogen, geothermal, carbon capture) and reliability-based contracts for aftermarket growth.

• Flex-Tek focuses on aerospace growth, U.S. housing demand, and industrial electrification trends.

Financial performance and outlook

• Four-year track record of 7% average top-line growth, 19% profit margins, and strong cash conversion.

• H1 2026: Organic revenue up 0.4%; John Crane grew 2% (aftermarket strong), Flex-Tek down 2% (construction and thermal solutions weak, aerospace up 10.1%).

• Operating margin at 20%, progressing toward medium-term targets; cash conversion expected in low to mid-90s%.

• Guidance for FY 2026: organic revenue growth of 3%-4%, with stronger H2 expected, especially in Flex-Tek aerospace.