Smiths shares nosedive after profit warning

 
Suzie Neuwirth

ENGINEERING firm Smiths Group yesterday warned that full-year operating profits would be up to £15m below expectations due to issues in its Smiths Detection unit.

The FTSE 100-listed company said that it had identified that three Smiths Detection contracts entered into prior to 2010 will be “materially adverse to previous expectations”.

In an interim management statement on 24 May, Smiths Group had highlighted that the headline operating margin at Smiths Detection would be affected by certain contracts and overheads at new manufacturing sites.

Smiths Detection, which accounts for about 17 per cent of the company’s revenue, makes sensors that detect explosives, weapons, chemical agents, nuclear and radioactive material, and narcotics.

All other divisions are trading broadly in line with forecasts, the company said.

The firm is scheduled to report full-year results on 18 September.

Smiths appointed Sir George Buckley as its chairman last month, who was previously head of US manufacturing giant 3M.

He will join the board in August and formally succeed Donald Brydon after he steps down at the Smiths annual general meeting in November.

The firm confirmed at the end of May that it was in early stage talks to sell its medical unit, which contributed more than 30 per cent of operating profit last year, for approximately £2bn.

The plans generated speculation about a possible company break-up or groundwork to become a takeover target, although no deal was announced.

Smiths shares closed down one per cent at 1,377p.

Analyst Views: How did you take Smiths group's results?