As Smiths Group updates the market Graham Spooner, investment research analyst at The Share Centre, explains what it could mean for investors:

“Shares are up over 4% in early morning trading for British engineering firm Smiths Group,
hitting a new all-time high. The bounce comes as a result of the company releasing its interim results, in which it stated that pre-tax profit for the first half was £346m, whilst revenue rose to £1.62bn which was up from £1.32bn reported for the same period last year.

“The group has a good mix of businesses, delivering products and services across five divisions. Smiths Group said today that a good performance in its detection unit, which makes security sensors, offset declines and a more subdued performance from the medical and John Crane divisions. Nevertheless, the company was keen to highlight that in tough markets, John Crane, which produces products for the energy sector and accounts for two-thirds of the division’s revenue, continued to show resilience with a modest return to growth in the aftermarket.

“Interested investors may want to acknowledge that the group’s Chief Executive Andy Reynolds Smith said today the new company strategy is now implementing measures across the business that he believes, ‘in the medium term, will deliver its twin priorities of chosen market outperformance and world-class competitiveness’. Moreover, margins and cash flow improved over the period which will all help to lay foundations for future organic growth.

“Over the years there have been many calls for the conglomerate to be broken up, but in its current form the shares carry less risk.  We therefore continue to recommend Smiths Group as a ‘buy’ for investors seeking a balanced return and willing to accept a medium level of risk.”


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