Shares in Smiths Group were down on the FTSE 100 in morning trading after the technology company reported a rise in pre-tax profit in the full year ended 31 July.
The group reported a rise in sales of four per cent to £2.77 billion, while pre-tax profit increased 17 per cent to £435 million.
Smiths said it would be holding its dividend at 34.0 pence per share.
The group also said that it had generated £24 million in savings from its restructuring programme, while funding for R&D increased five per cent to £93 million.
Philip Bowman, Chief Executive of Smiths, said, "We have delivered a strong performance in a tough economic environment. Our focus on operational improvement and restructuring continues to deliver significantly enhanced margins, which are now the highest for ten years. Headline operating profit is up strongly, driven primarily by organic growth across all divisions, as well as the benefit of recent acquisitions and favourable exchange rates. Sustained delivery on cash conversion supported a £75m increase in free cashflow to £331m. Return on capital employed increased 190 basis points to 16.6%.
"Looking ahead, our priority is to deliver the additional cost savings due from our restructuring and other initiatives. Cash conversion and improving returns continue firmly in our sights, as we invest in the drivers of future growth including new product development, marketing, an enhanced sales infrastructure and targeted acquisitions. The uncertain economic outlook and constraints on government spending will continue to affect sales growth. However, we will concentrate on those opportunities within our control to improve performance further and enhance margins."
By 09:45 shares in Smiths were down 0.58 per cent on the FTSE 100 to 1,207.00 pence per share.