Smiths reports slight increase in pretax profit
FTSE 100 technology company hit by government spending cuts
By CFOWorld.co.uk | CFO UK | Published 09:49, 14 March 12
Technology firm Smiths Group reported a slight increase in first-half pretax profit, helped by increased sales to the oil and gas industry, it announced on Wednesday.
However, its detection unit – which makes x-ray scanners and advanced explosion scanners – has been hit by government spending cuts. This has led to delays in large orders and the company expects this to continue through the year.
For the six months ended January 28, pretax profit rose 2 percent to £217 million, beating estimates of £181.5 million. Sales rose 3 percent to £1.42 billion, in line with estimates of £1.41 billion.
"The economic environment remains uncertain and continued pressures on government spending are likely to affect some of our divisions," Smiths said on Wednesday.
However, the company, which also makes medical devices and fuel hoses, said it saw further potential to grow overall sales, and added it was confident of meeting full-year expectations.
Revenue at the company's John Crane unit, which makes mechanical seals for the oil and gas industry and accounts for a third of total sales, was up 13 percent.
That offset an 11 percent fall in Detection unit sales. The unit accounts for about 16 percent of total sales
"Remediation in Smiths Detection is on track, although the benefits will be weighted to the second half," Smiths said.
Shares in the company closed at 1,101 pence in London on Tuesday, valuing the business at £4.3 billion.
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