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UPDATE 1-Smiths profit up, warns on impact from spending cuts
March 14, 2012 / 7:48 AM / 6 years ago

UPDATE 1-Smiths profit up, warns on impact from spending cuts

* H1 sales up 3 percent to 1.42 bln stg, in line with views

* H1 pretax profit up 2 percent to 217 mln stg, beats views

* John Crane boosts results, govt spending cuts hurt Detection

* Says confident of meeting expectations for the full year

* Pressures on govt spending likely to affect some divisions

LONDON, March 14 (Reuters) - British technology firm Smiths Group reported a slight increase in first-half pretax profit as higher sales to the oil and gas industry offset weakness at its detection business, which has been hit by government spending cuts.

Smiths’ Detection unit, which makes X-ray scanners used at airports and advanced explosion scanners, has been especially hit hard by delays in large orders from government agencies looking to cut public spending, and the company warned this would likely continue through the year.

“The economic environment remains uncertain and continued pressures on government spending are likely to affect some of our divisions,” Smiths said on Wednesday.

However, the company, which also makes medical devices and fuel hoses, said it saw further potential to grow overall sales, and added it was confident of meeting full-year expectations.

For the six months ended Jan. 28, pretax profit rose 2 percent to 217 million pounds ($341.5 million), beating estimates of 181.5 million pounds. Sales rose 3 percent to 1.42 billion pounds, in line with estimates of 1.41 billion pounds.

Revenue at the company’s John Crane unit, which makes mechanical seals for the oil and gas industry and accounts for a third of total sales, was up 13 percent.

That offset an 11 percent fall in Detection unit sales. The unit accounts for about 16 percent of total sales

“Remediation in Smiths Detection is on track, although the benefits will be weighted to the second half,” Smiths said.

Shares in the company closed at 1,101 pence in London on Tuesday, valuing the business at 4.3 billion pounds.

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