AGM Statement

Smiths Group PLC
13 November 2001

SMITHS GROUP ANNUAL GENERAL MEETING,
CHAIRMAN'S STATEMENT

Speaking at the AGM held at 12:00 noon today at 10 Aldermanbury, London EC2,
Keith Orrell-Jones, Chairman of Smiths Group said:

'We announced our preliminary results only two weeks after September 11 during
a time of great economic uncertainty. Now, two months after those events, some
of the effects have become more evident. But there remains a lack of clear
visibility about the future.

'Our experience has been that, in addition to the well-publicised consequences
for the aerospace sector, the last eight weeks have seen a noticeable
reduction in orders for a wide range of other products and services. This has
been felt by parts of our Industrial and Sealing businesses, some of which
have seen a 15% fall in orders on a year-on-year basis for that period.

'We indicated at the preliminary results meeting that the slowdown in civil
aerospace would be sharper and deeper as a consequence of September 11. The
aircraft manufacturers have kept us closely informed of their planned build
rates, but uncertainty will persist until airline revenues and profitability
regain some stability. As stated in the results presentation, our civil
aerospace sales, representing less than 20% of group sales, will progressively
decline through the current financial period and could drop by up to 40% in a
full year.

'The company took a £72m exceptional charge in July 2001 for merger-related
reorganisations now underway in Aerospace and Sealing Solutions. These involve
a net reduction of 1,600 jobs and the transfer of 500 jobs from the US and the
UK to lower cost countries. These and other predicted savings are on target.
Following the recent changes to the business outlook, we shall be further
downsizing, mainly in Aerospace, and an exceptional charge in the range of £40
- 50m will be incurred in the current year.

'Based on current expectations, we expect that the factors referred to above
will result in first half operating profits in our continuing businesses
showing a year-on-year decline of approximately 15 per cent. It is early days
to comment on the outlook for the full year. But we do not expect to recover
fully in the second half from the first half shortfall.

'However, the company's medical, defence and detection/protection businesses
will continue to perform strongly in the present environment, and the
restructuring measures we are taking are already having a significant impact
on the cost base, the benefit from which will increase as the year
progresses.'

 -ends-

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