Smiths Group has been backed by strong defense and security technology contracts, but annual profits are still falling
- Smiths Group is confident that it will meet market expectations for the full year
- Revenue in the continuing operations decreased 2 percent in the three months ended October 31
FTSE 100 engineering company Smiths Group had a strong performance last quarter after announcing last summer it would cut jobs to improve profit margins.
The company, whose products include airport baggage scanners and explosives detection devices, said it was confident of meeting market expectations for the full year and that its restructuring program was “making good progress”.
The group’s shares rose 4.8 percent to £ 15.75 after it was found that underlying sales in continuing operations were only 2 percent in the three months to the end of October thanks to solid aerospace, medical and industrial machinery sales went back.
Smiths Group recently received a $ 90.8 million contract from the US Department of Defense for opioid and explosive detection technology
The group stated that their John Crane subsidiary, which makes products such as mechanical seals and hydrodynamic products, is performing “as expected” and has been supported by high industrial sales that offset energy issues.
Smith Medical posted profits up 4 percent while Flex-Tek, which makes parts that heat and move liquids and gases, “had strong industrial sales that more than offset weakness in the aerospace industry”.
Smiths Group also won a number of security and defense technology supply contracts during the period, including a $ 90.8 million US Department of Defense contract for opioid and explosive detection technologies.
Another order was awarded by the US Customs and Border Protection for X-ray scanners at railroad checkpoints. As of earlier this month, the Israeli Prime Minister’s office has approved the use of the group’s hand luggage scanners at its airports.
Smiths Group offers a wide variety of machines for airports such as baggage scanners
“In a time of ongoing global disruption, the Group continues to demonstrate resilience based on leadership positions and a high proportion of aftermarket sales,” the company noted.
Five months ago, the company announced that the pandemic had caused some slowdown in business due to the coronavirus pandemic, but it had boosted orders for machines like ventilators.
It announced it would cut some jobs as operating results showed operating profit fell 23 percent to £ 327 million while sales rose a modest 2 percent to £ 2.55 billion.
“Smiths released a brief but reassuring trading update for the first quarter,” said Mark Davies-Jones of securities services company Stifel.
“With the exception of Flex-Tek, where the build side of the business was more robust than expected and more than offset the (expected) weakness in aerospace, the group has seen division trends that are very similar to expectations. “