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(Sharecast News) - A slimmed-down Smiths Group posted above-forecast earnings on Tuesday and guided for stronger growth going forward, despite the ongoing impact of war in the Middle East.
Organic revenues in the year to 31 July rose 1.2% to £1.94bn, while operating profits rose 1.9% to £399m on the same basis, ahead of consensus for £388m.
The 175-year-old engineer said it had delivered a "resilient" financial performance against a backdrop of "significant" end-market disruption in global energy, following the outbreak of war in the Middle East, and in US residential construction.
But it struck a confident tone looking forward. The blue chip - which now has two core businesses, John Crane and Flex-Tek, following a major overhaul - said its repositioned portfolio left it exposed to "several powerful global trends in structurally attractive markets".
It forecast organic revenue growth of 4% for the current year, supported by a "robust" order book. John Crane, its seals and components arm, is expected to see growth weighted to the second half, with the forecast assuming continuing disruption in earlier in the year due to war in the Middle East. In contrast, Flex-Tek's growth is slated for the first half, with the US construction market expected to remain subdued. Flex-Tek makes heating components.
Roland Carter, chief executive, said: "2026 was a year of significant strategic change. We transformed our portfolio and unlocked over £3bn of value, which repositioned Smiths as a focused, premium industrial engineering company.
"As we enter the 2027 full year, underlying market conditions remain challenging, but our robust order book and business momentum underpins our expectations of organic revenue growth of around 4% and further increasing our operating margin into our medium-term target range."
As at 0830 BST, shares in Smiths were trading 6% higher at 2,753p.
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