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March 20, 2013 5:42 pm
A new family of portable machines for assessing potential bomb threats on urban streets or the battlefield could give a fillip to the fortunes of Smiths Group, according to the UK industrial group’s chief executive.
Philip Bowman highlighted this part of the company as it tries to build on what he said was a “solid” performance in the first six months of the 2012/13 financial year, in which pre-tax profits rose 3 per cent to £223m. Sales in the six months to January 31 rose 4 per cent to £1.5bn, with earnings per share rising 1 per cent to 40.9p.
The company is rewarding investors with a 6 per cent increase in the dividend, which is going up to 12.5p from 11.7p.
Mr Bowman said spending on product development by the group had risen to about 6 per cent of revenues in the most recent six-month period, from about half this level five years ago.
In the detection division – which is responsible for about a fifth of the company’s total revenues, and where the best-known products are the scanners used to screen travellers in airports – about 10 per cent of sales now come from portable devices. However, this figure could increase significantly in the next few years, according to Mr Bowman.
“If somewhere in the world we had a significant incident that unsettled people, then there’s a good chance we’d see a big increase in sales from this particular part of the company [making portable bomb detection machines],” he said.
Smiths is also a big maker of engineering seals used to stop fluids leaking out of pumps and other rotating equipment in chemical plants, as well as small medical devices such as syringes and catheters.
On a more negative note, Mr Bowman warned of the impact on the company’s sales and profits from uncertainties in the US about government spending cuts plus a new tax on medical devices being introduced to help fund healthcare spending. In the first six months, the US was responsible for about 60 per cent of Smiths’ sales.
A positive development, Mr Bowman said, is that emerging economies such as China, India and Brazil – where demand trends are expected to stay quite strong – now account for some 15 per cent of Smiths’ sales, up from 5 per cent five years ago.
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