Smiths Group (SMIN) is likely to be the next FTSE 100 company to blame the strong pound for underwhelming numbers when it publishes full-year results next week. Broker JP Morgan expects group revenues for the year ending July 2014 to fall 3 per cent to £3.01bn, with the decline mainly driven by exchange rate movements.
There are many parts to the Smiths engineering conglomerate, and some divisions are performing better than others. John Crane, which sells mechanical seals and bearings to oil platforms, has recently lead the way, and flexible hosing business Flex-Tek also looks set to end the year well off the back of a robust US construction market. But growth in these divisions is unlikely to offset the pressure on operating profits within the group’s medical and detection divisions any time soon.
Overall, JP Morgan predicts that the medical and detection divisions will drag down operating profits by 6 per cent to £525m, giving EPS of 85.4p. The latter business, in particular, is expected to plunge a cyclical low, as defence spending remains weak.
