Engineer Smiths buoyed by demand for baggage scanners

Smiths Group reported organic turnover increased by 10.6% in the third quarter

By HARRY WISE

Updated: 13:52 BST, 20 May 2025

Smiths Group forecasts annual sales growth towards the top end of its guidance range, thanks to a robust performance by its sensors business.

The FTSE 100 engineering company reported organic turnover increased by 10.6 per cent in the quarter ending 3 May, bringing total revenue growth to 9.6 per cent over the first nine months of its financial year.

Its Smiths Detection arm, which makes explosives detectors and baggage scanners, scored ‘strong double-digit’ percentage rate over the quarter on solid demand from the aviation sector.

Smiths also achieved double-digit growth from its Interconnect segment, whose products include radio frequency components, thanks to contracts from aerospace and defence firms and a recovery in the semiconductor market.

For the full year, Smiths expects its organic revenues to rise by 6 to 8 per cent and its margins to expand by around 40 to 60 basis points.

Outlook: Smiths Group forecasts annual sales growth towards the top end of its guidance

All four of its businesses scored higher sales, but its John Crane arm only achieved a marginal rise due to a cyber incident in January that Smiths said had a ‘longer than expected impact’ on growth.

Consequently, the London-based company believes the division’s second-half performance will be ‘broadly in line with the first half’.

Smiths expects its full-year revenue to increase by 6 to 8 per cent on an organic basis and its margins to expand by about 40 to 60 basis points.

The firm is currently planning a major restructuring amidst pressure from activist investors like Engine Capital to break up the business and boost shareholder returns.

It expects to announce the sale of its Interconnect arm by the end of 2025, followed by either a demerger or disposal of its Smiths Detection segment.

Roland Carter, chief executive of Smiths, said: ‘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.’

He added: ‘The sale process for Smiths Interconnect is firmly underway and preparatory work for the Smiths Detection separation process is also moving forwards.’

Smiths also declared that it anticipates ‘limited’ impact from tariffs owing to its ‘local-for-local model.’ About 45 per cent of its sales are US-generated.

It told investors it was ‘closely monitoring’ the potential impact of tariffs on demand and had not observed ‘any material changes in customer behaviour to date.’

Smiths Group shares were 4.7 per cent up at £21.50 just before midday on Tuesday, making them the FTSE 100 Index’s second-biggest riser.

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Engineer Smiths buoyed by demand for baggage scanners

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Engineer Smiths buoyed by demand for baggage scanners