Smiths Group shares dive after missing FY24 estimates

Investing.com — Shares of Smiths Group (LON:SMIN) fell on Tuesday following its FY24 results after it missed estimates in key metrics.

At 4:39 am (0839 GMT), Smiths Group was trading 8.1% lower at £1,672.

Smiths Group reported group sales of £3,132 million, slightly below the consensus estimate of £3,149 million, while EBITA came in at £526 million, 1.7% below the consensus of £535 million. 

The company’s operating margin was 16.8%, also marginally below the forecasted 17.0%. 

Despite these misses, headline EPS slightly exceeded expectations, reaching 105.5p compared to the consensus of 104.6p.

Divisional performances were mixed, with the John Crane and Interconnect divisions missing forecasts, while Detection saw a slight beat driven by higher margins. 

“Slight EBITA miss and slight downside risks to 2025E consensus partly offset by bolt-on acquisitions,” said analysts from RBC Capital Markets in a note. 

For FY25, the consensus anticipates EBITA at £580 million, with organic growth of 5.8% and an operating margin of 17.5%. 

However, there is a risk of downside here, particularly with the slightly lower operating margins expected in FY25, which could be further impacted by slight misses in growth targets, said RBC​.

The newly appointed CEO has initiated cost-saving measures aimed at driving a 100 basis point improvement in margins by 2027 which includes lean manufacturing efforts and efficiency improvements in shared support functions​.

“Slight FY margin miss and small consensus downside risks. New cost plan shows a focus on improving margins which has been an area of limited progress,” the analysts said.