Engineering group Smiths yesterday forecast strong growth in full year profits - but warned of higher one-off costs.
The aerospace-to-medical devices firm, which has aerospace plants in Cheltenham and Wolverhampton, said it expected headline operating profits to come in about 16 per cent ahead of the previous year.
It said it anticipated that all four of its divisions would achieve double digit improvements in operating profits despite a hit of about £11 million from the weaker dollar and higher research and development investment.
However, the company added that exceptional charges were likely to be in the region of £50 million against £19.9 million last time. It said they would include the costs of the second year of the company's restructuring programme begun in 2004 and integration and litigation settlement charges.
Shares were two per cent lower following the trading update.
Smiths said recent acquisitions were yielding savings, increased product development investment was paying off and that the group's continuous productivity drive would enhance profitability.
In the statement ahead of its final year results, Smiths said the market outlook remained positive in the sectors that were important.
"The company is confident of the prospects for growth in 2006," it said.
Smiths has four divisions including detection, medical and speciality engineering and its largest business of aerospace.
The company was founded in 1851 as a family clock and watch-making business and employs about 9,000 people in the UK.
It said the integration of recent acquisitions was proceeding well and had made a valuable contribution to profitability in addition to good organic growth.
The company completed the acquisition in March of one of the world's leading medical device companies, Californiabased Medex.
Yesterady, it announced three acquisitions for a total of £16 million in the medical and speciality engineering divisions, which it said were in line with its growth strategy.
Smiths Medical has bought its Italian distributor Sevit while its speciality engineering division had bought two US manufacturers in the sector.
It said the acquisitions would lead to net debt at the year- end of about £950 million, while increased capital spending and a higher level of working capital was expected to result in a lowerthan-normal conversion of operating profit into cash.
Potential exceptional charges of £50 million would reflect the second year of the shake-up started in 2004, the initial phase of the integration of Medex and the settlement of litigation involving the company's Cozmo diabetes pump.