FTSE 100 engineering business Smiths Group recorded strong performance in the last quarter, which followed its summer announcement that jobs would be cut to improve profit margins.
The firm, whose products include airport baggage scanners and explosives detection equipment, said it was confident of meeting full-year market expectations and that its restructuring programme was ‘progressing well.’
Shares in the group ended 4.8 per cent higher at £15.75 after it revealed underlying revenues in its continuing operations fell just 2 per cent in the three months to the end of October, thanks to solid sales of aviation, medical and industrial machinery.
Smiths Group recently won a $90.8million contract from the US Department of Defense for technology that can detect opioids and explosives
The group declared that its John Crane subsidiary, which makes products like mechanical seals and hydro-dynamic, ‘performed as expected’ and was helped by high industrial sales making up for problems in energy.
Smith Medical saw earnings climb 4 per cent while Flex-Tek, which creates parts that heat and move fluids and gases ‘had strong industrial sales that more than offset Aerospace weakness.’
Smiths Group also won some contracts to provide security and defence technology during the period, including a $90.8million contract from the US Department of Defense for technology that can detect opioids and explosives.
Another contract was awarded from the US Customs and Border Protection for X-ray scanners at railway checkpoints, and since the start of this month, the Israeli Prime Minister’s office has approved the use of the group’s carry-on baggage scanners at its airports.
Smiths Group provides a lot of machinery for airports such as baggage scanners
‘In a period of ongoing global disruption, the Group continues to demonstrate its resilience, founded on market-leading positions and a high proportion of aftermarket revenues,’ remarked the firm.
Five months ago, the company said the pandemic had caused ‘some slowing’ in its business because of the coronavirus pandemic, but that orders for machinery like ventilators had buoyed it.
It announced it would cut some jobs as its annual results showed operating profits sliding 23 per cent to £327million while revenues increased by a modest 2 per cent to £2.55billion.
‘Smiths has issued a brief but reassuring trading update for Q1,’ said Mark Davies-Jones of investment services firm Stifel.
‘The group has seen divisional trends which are much as expected, with the exception of Flex-Tek, where the construction side of the business has been more robust than expected and has more than offset the (anticipated) weakness in aerospace.’