Smiths News — EPS up 10%; new MD for recycling appointed

H125 EPS grew 10% despite some revenue pressure on the core business as non-core revenue streams increased, cost savings were generated and finance costs declined. Furthermore, the company has appointed a new MD for Smiths News Recycle, which is a strong endorsement for its final-mile growth prospects. The addressable non-core ‘early morning’ market is sizeable and has a profit opportunity of c £160m, which implies that there is potential to more than offset the decline seen in the core operations and could lead to long-term profit growth. This in turn underpins the cash generation and the dividends, and could see further distributions if investment for growth is not required. We maintain our full year forecasts and our 93p/share valuation.