Smiths Group has upped its annual guidance again following record organic first-half revenue growth thanks to favourable currency swings and construction product demand.
The engineering firm now anticipates organic revenues will swell by 8 per cent or more this fiscal year, compared to a previous forecast made in January for at least 7 per cent growth, which was itself an increase on a prior outlook.
Total sales jumped by £305million to just shy of £1.5billlion for the six months ending January, a rise of around a quarter year-on-year, with beneficial foreign exchange movements being responsible for over 40 per cent of growth.
Outlook: Smiths Group now anticipates organic revenues will advance by 8 per cent or more this fiscal year, compared to a previous forecast made in January for at least 7 per cent growth
The majority of turnover expansion was driven by record organic revenue growth of 13.5 per cent as all business segments, geographic regions and customer end markets performed strongly.
Of Smiths Group’s four divisions, hosing and tubing manufacturer Flex-Tek saw the fastest growth in turnover on the back of high orders for heating, ventilation and air conditioning equipment.
At the same time, John Crane, the group’s largest business, saw revenues soar by more than £100million on solid orders from the life sciences, pulp and paper, and chemical processing sectors.
The division, which supplies mechanical seals for oil pipelines among other products, earned significant business from the booming petroleum and renewable energy industries.
It has received significant orders in the wake of the Ukraine war from countries looking to expand oil production to make up for lost capacity from Russia.
While this has happened, it has won multiple contracts to develop hydrogen projects in Europe and Canada, as well as a carbon capture utilisation and storage expansion scheme in Wyoming, USA.
Smiths Group said John Crane clients ‘are requiring systems to be more reliable and energy efficient, interconnected and digitally enabled, and use diverse low-carbon energy sources’.
It added: ‘These trends benefit John Crane as they require significant investment in new infrastructure and retrofits to existing infrastructure, as well as new technology to reduce cost and accelerate the deployment of cleaner energy.’
John Crane provided around half the growth in Smiths Group’s operating earnings, which rose by £30million to £187million.
On a statutory basis, the London-listed firm’s profits were 90 per cent lower, having benefited in the prior year from a £1billion gain on the disposal of its medical unit.
Investors have received £657million of proceeds from the sale as part of a share buyback programme, with a further £85million more set to be returned to them.
On top of this, they have been awarded a 5 per cent hike in the interim dividend to 12.9p per share.
Smiths Group shares were 1.4 per cent, or 23.5p, higher at £17.39 on Friday morning. Over the past three years, they have increased by approximately 93 per cent.
