Smiths Group boosted by revenue growth upgrade

British engineer Smiths Group upgraded its annual revenue growth guidance as strong demand for airport scanners provided a lift to sales, sending shares to a record high.
The FTSE 100 company reported a 15.8 per cent increase in revenue growth for the three months to November 1 boosted by its detection unit, which accounts for 28 per cent of group revenue.
Shares in Smiths climbed as much as 15 per cent after the strong quarterly results, which came alongside the announcement of an expanded share buyback programme, from £100 million to £150 million.
“We expect the rollout of our advanced threat detection systems to continue, the rollouts at airports are not even 50 per cent, through and we are seeing strong benefit from it,” Clare Scherrer, chief financial officer, said.
The company, which makes industrial and medical equipment as well as airport baggage scanners, expects annual revenue growth of 5 to 7 per cent for the 2025 financial year, up from its previous guidance of 4 to 6 per cent.
The group’s detection division recorded double-digit organic revenue growth in the three months to November 1, following strong demand for its airport scanners and explosive detectors.
Roland Carter, Smiths chief executive, said: “We entered our new financial year with a strong order book, driving a very positive first quarter and with all our businesses contributing to the double-digit organic revenue growth.”
He added that the engineering group had benefited from the strong performance of its business in the United States, which accounts for about 45 per cent of its revenues.
• Smiths Group misses target on margins
The engineering group also said it now expects to report a 40 to 60 basis point increase in its operating profit margin. The business had previously said that it would report “continued margin expansion” in the 2025 financial year.
Smiths is the last great British industrial conglomerate, with its four divisions of John Crane, Detection, Flex-Tek and Interconnect spanning the energy, aviation and aerospace, construction, automotive and semiconductor industries.
The group said that John Crane, the division that services the energy industry, had reported high single-digit organic revenue growth in the quarter following strong demand.
Smiths industrial division, Flex-Tek, recorded “low single-digit” organic sales growth as it received a boost from growth in the construction sector in the US as well as strength from the aerospace industry. The business has also completed the acquisition of both Modular Metal Fabricators and Wattco.
The group’s Interconnect division reported organic revenue growth of more than 30 per cent in the three-month period as it benefited from the recovery of the semiconductor market and a weak comparator.
The extension of the buyback came after a decision not to pursue a “medium-sized acquisition it was closely evaluating”.
Carter was appointed to head up the engineering group in March this year after his predecessor, Paul Keel, returned abruptly to America. Keel had been trying to turnaround the FTSE 100 business since 2021.
Earlier this year, Carter launched a new “acceleration plan” to shake up the company, which for many investors prior to the pandemic had long failed to live up to its potential. He pledged to spend up to £65 million on improving the group’s productivity and optimising its facilities, which is expected to bring in up to £35 million of annual benefits but these will not be fully realised until 2027.
Analysts at Stifel, the investment bank, said: “We consider this an impressive update, which should be clearly positive to a share price that has been languishing.”
“Smiths looks well-placed for new geopolitical realities — low exposure to China — a big dollar earner — big hydrocarbon end markets, and largely local-for-local in its markets,” they added.
Shares in Smiths Group rose 159p, or 10.4 per cent, to £16.81 at close in London on Wednesday.