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Smiths Group UK projects top-end sales growth with limited tariff impact

Smiths Group, a British company, said Tuesday that its organic revenue growth will reach the upper end of its forecast range between 6% and 8%. The demand for its explosives detectors and baggage screening kits helped to boost third-quarter sales by 10.6%.

The engineering firm said that it expected a limited impact as "significant majority" (of its products sold in America) are manufactured there. It would also manage this impact by pricing actions and surcharges.

The group said that it closely monitors the indirect macroeconomic impacts of tariffs on supply, demand and inflation, but hasn't seen any material change in customer behavior to date.

Smiths shares, which account for about 45% its sales in America, rose by 4% at the opening of trading.

Smiths stated that the company's forecast includes an expected margin increase of 40-60 basis point, and incorporates the impact of current tariffs.

JPMorgan analysts noted Smiths' current estimate implied organic revenue growth in the fourth quarter of approximately 3%. They called this "cautious", given the uncertain economy.

Smiths still plans to sell its electronic component division by 2025. It will then demerge or sell the airport baggage screening kits and explosives detection business.

The company announced in January that it would be breaking up under pressure from the activist investor Engine Capital, and focusing on industrial technology through its John Crane & Flex-Tek businesses.

(source: Reuters)