Smiths Group hit by government spending cuts

Engineering conglomerate reports fall in full-year revenue and profit

Smiths Group, which manufacturers industrial seals, medical devices and security detectors, has reported a 11% fall in full-year pre-tax profit to £445 million.

Its full-year revenue fell 5% to £2.95 billion.

The group said its detection business, which makes sensors that detect explosives, chemical agents and biohazards, saw sales fall 5% or £25 million as national governments cut their budgets.

The division also had to contend with a further £22 million impact from foreign exchange translation as profits in detection dropped 58% to £25 million.

It added that declines at its medical unit and the strength of sterling, which cost it £43 million overall, meant pre-tax profits slumped 24% to £302 million.

This has been offset by progress at John Crane, which serves customers such as oil giant Shell with products including seals and filtration systems, and at Flex-Tek, which provides hosing and rigid tubing for fuel and hydraulic applications on commercial and military aircraft.

Chief executive, Philip Bowman, said he "remains cautious about sectors such as healthcare, homeland security and defence, which are subject to government funding constraints, although there are signs that the defence market is beginning to stabilise".

The group's shares fell more than 5% on the news.