Smiths Group PLC (LON:SMIN) has reported a return to growth towards the end of its financial year but saw disappointing results for its medical division following upcoming EU regulatory changes.
In a trading update ahead of its full-year results, the FTSE 100-diversified engineering firm reported revenue growth of 3% on an underlying basis for the 11 months to June 30 , reflecting an acceleration in its growth rate in the second half of the year, with good performances from its John Crane, Smiths Detection, Smiths Interconnect, and Flex-Tex businesses. As a result, it expected full-year performance to be in line with expectations.
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The only outlier was the firm’s medical division, Smiths Medical, which was expected to deliver a revenue decline of 2% in the full-year after a new EU medical device regulation, due to come into force in 2020, meant one of the company’s European service providers had been decertified for some products leading to a temporary suspension of some of Smith’s products in Europe.
This was compounded by the termination of two contracts with clients in the US, but the firm said aside from these developments, the division was delivering good underlying growth.
This news follows an announcement at the end of May that Smiths was in very early stage discussions regarding the potential combination of its medical division with US firm ICU Medical Inc (NASDAQ:ICUI).
In its portfolio, Smiths said its John Crane division had completed the sale of its Bearings business to Miba AG for an enterprise value of US$35mln and, in June, had completed the acquisition of Seebach GmbH, a provider of highly-engineered filtration solutions, for an enterprise value of €60mln.
In its outlook, the group said it expected to achieve sustainable organic growth over the medium term.
Smiths will release its full-year results on 21 September 2018.
In early morning trading Wednesday, Smiths shares were down 6.1% at 1,642.5p.