There are many moving parts at engineering conglomerate Smiths Group (SMIN), and they rarely work in perfect harmony. It was no different during the first half, when John Crane, which supplies companies with mechanical seals and bearings, was again asked to offset a big fall in profits at the medical division and smaller declines elsewhere. Smiths still missed estimates, but near a seven-month low and with a better second-half in store, the shares look good value.
Underlying operating profit, which strips out one-offs, including a big increase in asbestos litigation costs and a £2m currency hit, fell by 2 per cent to £245m at the group level. Thankfully, it grew by 9 per cent at Smiths' biggest money-maker John Crane, despite bad weather in the US. A record-breaking 140 basis-point surge took margins above 23 per cent - a "sustainable" level, according to finance director Peter Turner. A record order book should accelerate sales growth during the second half into the mid single digits, too.