Sales rise at Smiths Group
BRITISH technology firm Smiths Group has revealed strong sales and profit growth, despite a sluggish performance in its detection unit.
The airport scanner maker said underlying sales were ahead of last year in the 10 months to 28 May, driven by growth in its John Crane business unit.
But lower sales from its Smiths Detection business, which makes X-ray inspection and other security systems, have offset sales performance.
The FTSE 100-listed company said it expected the sales trend to continue for the remainder of the year.
Smiths Group first warned it would take a knock in sales last November, due to a delay in large orders from government agencies.
At the time, the level of military spending in the UK and elsewhere was called into question as governments looked to implement austerity packages.
Smiths said its John Crane business, which provides products and services for process industries, had built a strong order book in the first 10 months of the year.
It said the unit had driven sustained underlying sales growth, particularly from the oil and gas markets.
The firm said its Smiths Medical division, which supplies specialist medical devices, had improved its operating margins. However, it warned that the squeeze on healthcare budgets in many markets left it facing a “tough trading environment”.
“When they warned about detection there might have been some remaining hope that orders arrived soon thereafter and helped the second half out,” RBS analyst Sandy Morris said. “I think we can say now that’s unlikely.
“Medical was fine – there’s no bad news, but there’s no good news either. Perhaps we were hoping for just a little bit of momentum into the second half,” he added.
Smiths Group shares lost two per cent to close at £11.77 yesterday.