INV NA 10/2004
14
Keeping input costs in check
Sales 2004 £2.7 billion current outlook
Payroll costs 30%
Purchased materials 20%
Fixed costs 10%
Gross margin 40%
S&D 10%
G&A 11%
R&D 5%
Net margin 13%
Operating profit £360m
(% of sales)
Material costs are a factor:
must be counteracted by volume, pricing and efficiency
Increases pegged to efficiency gains
Cost are rising: energy/metals/PVC
Less significance for Smiths
Holding steady
Increased volume has positive effect