Smiths plunges as strong pound hammers profit
SMITHS Group fell 50p or nearly four per cent per cent yesterday after a weak performance from its medical unit and a strong pound negatively impacted on first-half profits.
The FTSE 100-quoted firm, which makes mechanical seals, bomb detectors and medical devices, reported a four per cent decline in pre-tax profit to £215m, while revenue fell two per cent to £1.4bn.
“We made good progress in our businesses that serve commercial customers, while those with significant government and healthcare exposure continued to face challenging trading conditions,” said chief executive Philip Bowman.
Operating profits for the medical unit went down 18 per cent, with sales volumes affected by US distributors destocking their inventories. But Smiths saw a stronger performance from its US unit John Crane, which makes seals and filtration systems, and Flex-Tek, which makes parts that heat and move fluids.
The company said that foreign exchange headwinds will increase in the second half, with a four to five per cent impact on full-year earnings.
“We will maintain our focus on investing to drive sales growth in what are attractive long-term markets, and delivering further operational improvements, while providing strong cash conversion and returns,” said Bowman.