Smiths Group has seen revenue and profit drop in its medical unit which it failed to sell this summer.
The division, alongside Smiths’ slumping explosives detection business, will now be subjected to a groupwide restructuring which chief executive Philip Bowman believes could lead to £50 million in cost savings over the next four years.
Smiths’ government work in developed markets has been hit by austerity measures in the wake of the financial crisis, leaving annual pre-tax profit flat at £498 million and revenue up a mere 2% to £3.1 billion.
However, Bowman did hand shareholders a £118 million special dividend today, worth 30p a share. The shares rose 47p to 1423p.
Constrained hospital budgets led to the downturn in demand for the group’s medical products, which include catheter connectors and syringe pumps.
Smiths has long been looking to offload the medical division, even though it accounts for 27% of group revenue, having talked to private-equity group Apax about a £2.45 billion deal in 2011.
It is thought that Bowman was hoping to raise £3 billion from a sale this year, which would have possibly been the first stage of a full-blown break-up of the 162-year-old engineer. Bowman said he remained “cautious” over the prospects for the medical and defence markets.
Smiths has lured Sir George Buckley out of retirement to become chairman in November. He previously headed 3M, the maker of Post-it notes.