British engineering company Smiths Group reported a surge in revenue for its third quarter, buoyed by effective demerger strategies.
The enterprise saw a notable 10.6 percent increase in revenue, attributed to a robust performance and growing momentum in the order book, as reported by City AM.
Share values for the group witnessed an uptick of over two percent to 2,100p during Tuesday morning’s trading.
Smiths Group is optimistic, forecasting revenue growth at the higher end of its projected six to eight percent range and looking to widen their profit margin by 40 to 60 basis points.
The firm’s energy division, John Crane, experienced only a “marginal” organic revenue increase this quarter, hindered by the residual effects of a cyber attack back in January.
In response to the breach that allowed unauthorised system access, the company cut off compromised systems and put contingency plans into action.
This digital assault led to operational setbacks for John Crane, causing delayed shipments and impacting the division’s profitability.
Over in its Flex-Tek business, the firm announced “high single-digit” surges in revenue, spurred by progress in aerospace and in its construction ventures which have surpassed the American housing market standards.
Smiths has also reported smooth integration of its trio of acquisitions – Modular Metal Fabricators, Wattco, and Du-Pac Corporation.
Amid pressures from activist investors, Smiths is pressing ahead with strategic manoeuvres.
Smiths follows activist investor calls
The group confirmed that demerger plans are “on track,” with a sale of its Smiths Interconnect operation expected by the end of 2025, followed by a separate sale of its Smiths Detection arm.
This comes after significant pressure from US activist investor Engine Capital, which urged the firm to divest from its interconnect arm and concentrate on industrial technologies.
Following the announcement of plans to spin off its Smiths Detection business in January, shares soared to a record high of 2,066p. The firm surpassed this mark in the subsequent month but experienced a downturn following Trump’s ‘Liberation Day’ tariffs.
As the President imposed sweeping tariffs on all US trading partners, shares in Smiths Group plummeted to a low of 1,695p.
The company revealed it generates approximately 45 per cent of its sales in the US, with a substantial majority produced there.
The group anticipates the impact of Trump’s tariffs to be “limited given its local-for-local model.”
“Full year guidance incorporates the direct impact of the current tariffs in place.
“The Group is closely monitoring the potential indirect macroeconomic impact of tariffs on demand, inflation and supply chains, and has not seen any material changes in customer behaviour to date,” stated the third-quarter report.
Roland Carter, Chief Executive of Smiths Group, stated: “We are executing on the strategic actions we announced in January with pace and purpose to unlock our inherent value and become a premium rated company, focusing on our world-class, high-performance John Crane and Flex-Tek businesses.
“The sale process for Smiths Interconnect is firmly underway and preparatory work for the Smiths Detection separation process is also moving forwards.”
