Smiths Group beats full-year guidance, but slowdown expected

(Sharecast News) - Engineering business Smiths Group delivered strong annual results on Tuesday, with organic growth coming in ahead of twice-raised guidance and profits up by double digits - though a slight slowdown is expected over the coming year. Group revenues totalled £3.34bn over the 12 months to 31 July, up 6.5% over the year before, with organic group revenues up 8.9%, well ahead of most recent target of 6-8% growth.

All of Smiths Group's businesses contributed positively to organic growth, with double-digit improvements seen in Smiths Interconnect (+22.5%) and Smiths Detection (+15.2%), tempered by more subdued performances at John Crane (+3.0%) and Flex-Tek (+4.4%).

"We exceeded our guidance despite the uncertain macro and tariff environment, a challenging US construction market and interruption from the cyber security incident in January, with the most notable impact being in John Crane," the company said.

Operating profits were 10.3% higher at £580m, rising 13.1% on an organic basis, helped by the operating profit margin rising by 60 basis points to 17.4% - the top end of the 40-60bp guidance range.

Operating cash conversion also improved to 99% from 97%, well ahead of the 90% level expected.

Looking ahead, the company said that separation processes for Smiths Interconnect and Smiths Detection were progressing, with an announcement on Smiths Interconnect expected before the end of 2025.

In terms of financial targets, Smiths Group pointed to a slight slowdown over the current financial year, guiding to organic revenue growth of 4-6%, citing ongoing macro uncertainty "with tariffs and increased geo-political risks causing market instability". This is below the 7.4% average organic revenue growth recorded over the past four years.