Smiths Group reports dip in profit

Company confident of improved performance in the second half of the year

Smiths Group, which manufacturers industrial seals, medical devices and security detectors, has reported a £1 million drop in pre-tax profit to £131 million for the six months to 31 January.

The British company posted a 2% fall in revenue to £1.4 billion for the six month period.

The group said improved performances by Smiths Medical, John Crane and Flex-Tek more than offset revenue declines at Smiths Detection and Smiths Interconnect, which continued to experience tough trading conditions. The reported results were held back by adverse foreign exchange, it added.

Chief executive Philip Bowman said: “We remain focused on repositioning the business to accelerate medium-term revenue growth and have launched a new cross-divisional programme to add further momentum. ‘Engineered for Growth’ has four workstreams: sales and marketing effectiveness; bringing new products to market faster through innovation; quality improvement; and increasing our presence in China. Our growth investment is funded by ongoing operational improvements and our ‘Fuel for Growth’ programme, which is on track to generate £60 million of annual savings by 2017.

“We expect to deliver improved underlying performance in the second half. Smiths Detection will benefit from a prior year comparator affected by one-off charges. John Crane is expected to see a slight easing in trading as upstream customers adjust their expenditure to the lower oil price and as some projects may be deferred. The growth rate at Smiths Medical will slow versus the strong first half performance. Seasonality will bias performance at Smiths Interconnect to the second half but trading in the second half will remain below last year’s levels. Flex-Tek should continue to perform well. We are focused on investing to drive sales growth in what are attractive long-term markets, and on delivering further operational improvements, while generating strong cash conversion and returns.”

The group's share price fell 11.5p to 1166.5p on the news.