Smiths News — New recycling MD underpins new activity potential

Smiths News’ PBT increased by 11% in H125, a combination of higher profits and lower financing costs as both debt and debt margins declined. However, in addition to this and perhaps more exciting is confirmation that Smiths has appointed a managing director for its recycling operations from within the industry, a clear endorsement of the potential in this area. Furthermore, its new activities are already gathering momentum, which is mitigating the structural decline of the news and magazine activity and, we believe, has the potential to result in long-term profit growth. This in turn underpins cash generation and dividends, and could see further distributions. We have maintained our operating profit forecasts and valuation of 93p/share, but reduced our FY25 net debt estimate.