British engineering company Smiths Group has reported a 20% increase in annual profit and expects further growth this year as the drive to decarbonise among its industrial customer base continues. The company, which is part of the FTSE 100, manufactures highly engineered seals, filters, and electric heating elements used in various clean energy projects, including hydrogen, carbon capture, and zero-emission steel mill initiatives.
Smiths Group’s Chief Executive, Paul Keel, highlighted the growing importance of the energy transition, stating that it is no longer just a future consideration, but a present reality. Keel estimated that around 20% of the company’s total revenue of £3 billion for the 12 months up to July 2021 came from decarbonisation efforts. He expressed confidence that this share will continue to increase.
The company generates the majority of its revenue from the Americas, where it has benefited from the Inflation Reduction Act in the United States. This legislation provides federal funding of nearly $400 billion for clean energy and technologies. Smiths Group has been able to capitalize on green energy trends in the region, along with the demand for its airport scanners, which eliminate the need to remove liquids from bags during security checks.
Despite the positive outlook, Smiths Group has been impacted by the softer semiconductors market. However, the company’s airport scanners and the increasing demand for clean energy solutions have helped counterbalance this effect.
For the current financial year, Smiths Group has projected organic revenue growth of 4% to 6% and expects profit margins to strengthen. In its last financial year, the company reported an operating profit of £501 million ($610.57 million) and raised its final dividend by 5%.
Shares in Smiths Group remained flat in early trading. Goldman Sachs analysts commented on the company’s strong results and guidance, stating that they believe Smiths Group is entering a structurally higher growth phase.
The company’s positive financial performance and its focus on decarbonisation reflect the increasing importance of clean energy and environmental sustainability in both the industrial and consumer sectors. Smiths Group’s products play a significant role in enabling the development and implementation of clean energy projects, aligning with the global push for reducing carbon emissions and combating climate change.
More detail via Reuters here… ( Image via Reuters )