Energy weakness hits Smiths revenue but security sales increase

BRITISH CONGLOMERATE Smiths Group reported a fall in underlying revenue due to weakness in its energy equipment and service business as well as its medical device unit.

However, sales at its security devices unit rose, cushioning the impact of declines in the bigger businesses. Smiths said the headline revenue fell 1 per cent on an underlying basis for the year to July 31.

Underlying revenue at the conglomerate’s John Crane business, which serves oil majors BP and Chevron among others, fell 4 per cent to £885m as tough market conditions persisted. Delays in new product launches hit the group’s largest unit, Smiths Medical, with underlying revenue declining 3 per cent to £951m.

Analysts were expecting the company’s medical unit to report £962m in sales, while revenue from the John Crane unit was estimated £880m.

Chief executive Andy Reynolds Smith said: “We expect the introduction of new products during the year to support a gradual improvement in Smiths Medical.”

Smiths Group’s reported revenue, to come in at however, rose 11 per cent to £3.28bn, helped by a weaker pound as it sells in markets outside Britain.

Jefferies analyst Sandy Morris said: “Returning revenue to sustained organic growth is arguably the key thing for Smiths to achieve, in our view. Smiths guides for a return to growth in 2018,”

Underlying sales in the group’s detection unit climbed 4 per cent to £687m.

To bulk up the division, the company agreed last year to purchase Safran’s US Morpho Detection business.