Smiths Group (LSE:SMIN) has reaffirmed its full-year outlook after reporting a strong first half, marked by higher sales and profits, a fresh acquisition in the United States, and upgraded financial targets for its core industrial divisions.
Revenue for the six months to the end of January rose 9.1% on an organic basis to £1.61 billion, with operating profit margins up 50 basis points to 16.7%. Earnings per share climbed 14% to 55.5 pence.
The FTSE 100 engineering group also said it had acquired Duc-Pac, a US manufacturer of HVAC ducting, for £32 million.
The deal expands its Flex-Tek business into the north-east of the country and follows £97 million of bolt-on acquisitions already completed this financial year.
Meanwhile, a previously announced £500 million share buyback is underway, with £150 million returned to date and the remainder to be completed by year-end.
Chief executive Roland Carter said the company’s “FutureSmiths” strategy - centred on its core John Crane and Flex-Tek businesses - would deliver stronger returns.
New medium-term targets include organic revenue growth of 5–7% and operating margins of 21–23%, up from previous goals. The business is being simplified through the planned sale or demerger of its Smiths Detection and Interconnect divisions, with Interconnect expected to be sold by the end of 2025.
The results were delivered despite a cyberattack in January that briefly affected operations. Most systems have now recovered, with full-year costs linked to the incident expected to be between £4 million and £5 million. John Crane was the most affected business due to its more complex systems, which weighed slightly on its start to the second half.
For the full year, Smiths continues to expect organic revenue growth of 6–8% and margin expansion of 40–60 basis points.
The order book remains healthy, and the group said it was on track despite a soft US construction market and the impact of tariffs. Operating cash conversion was 94% in the first half, helping fund £213 million in shareholder returns via dividends and buybacks.
The shares, up 16% year-to-date, opened flat at 2,006.79p.
"In all, a very solid update, in our view, with trading on track, and value-creating portfolio actions underway," said American bank Stifel, repeating its 'buy' recommendation and 2,450p price target.