Smiths Group gets growth boost from decarbonisation drive

  • H1 profit up 27%, beats forecasts
  • Upgrades FY growth forecast
  • Pipeline of hydrogen projects doubles
  • Shares up 1%

LONDON, March 24 (Reuters) - British industrial technology company Smiths Group (SMIN.L) has upgraded its annual forecasts after a 27% increase in first-half profit as demand for its products soars on decarbonisation trends and from airport upgrades.

The FTSE 100 group makes precision scanners used at airports, venues and borders, as well as valves, connectors and specialist tubing used in the oil and gas, construction and defence sectors, but are also needed for the transition to low-carbon fuels and hydrogen.

Smiths Group's CFO Clare Scherrer said that the pipeline of projects with exposure to hydrogen, which has a role in the sustainable energy transition, has doubled over the past year.

"Everyone's looking at how to invest smartly to enable this transition," Scherrer told Reuters on Friday, explaining Smiths strong first-half and buoyant outlook.

For the 12 months to the end of July, Smiths said it now expected organic revenue growth of at least 8%, up from guidance given in January for growth of at least 7%, which was already an upgrade from previous guidance.

Organic revenue growth came in at 13.5% in the company's first-half, with the slow down over the coming months attributed to tough comparables plus lower growth in the U.S. construction market and in semi-conductors.

Headline operating profit for the first-half was 241 million pounds ($296 million), 27% higher than the same period last year and ahead of a consensus forecast. Smiths also lifted its interim dividend by 5% to 12.9 pence.

Reacting to the profit beat and upgrade to forecasts, analysts at JP Morgan said: "The change is real under this management team."

Smiths appointed Paul Keel as chief executive in 2021 and he has sought to put the company on the path to sustainable growth.

Shares in Smiths, which have risen 14% in the last 6 months outperforming Britain's bluechip index, traded up 1% in early deals.

($1 = 0.8145 pounds)

Reporting by Sarah Young; Editing by Kate Holton and Jane Merriman

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Sarah reports on UK breaking news, with a focus on British companies. She has been a part of the UK bureau for 12 years covering everything from airlines to energy to the royals, politics and sport. She is a keen open water swimmer.