Smiths Group Sets 4% Growth Target After Portfolio Reset

Smiths Group forecast organic revenue growth of around 4% in fiscal 2027 after reporting 1.2% growth for the year ended July 31. Its operating margin rose to 20.6%, and total group earnings per share increased 12%, the company said.

Chief Executive Roland Carter told investors the company had reshaped its portfolio, completing the sales of Smiths Interconnect and Smiths Detection for a combined £3.3 billion in enterprise value. Smiths also bought DRC Heat Transfer for £165 million, adding cooling technology used in data centers.

The company’s two continuing businesses had mixed results. John Crane’s organic revenue grew 2.3%, while Flex-Tek’s fell 0.4%, weighed by weaker construction and thermal-solutions sales.

John Crane’s second-half performance took an estimated £20 million hit from Middle East conflict-related disruption. Chief Financial Officer Julian Fagge said on the call that Smiths expects a similar impact in the first half of fiscal 2027, largely in aftermarket sales.

Smiths expects its fiscal 2027 operating margin to reach about 21%, entering its medium-term target range of 21% to 23% ahead of schedule. It also forecast cash conversion in the low 90% range, below the 96% recorded in fiscal 2026.

The outlook assumes continued Middle East disruption in the first half, subdued U.S. homebuilding, stronger aerospace activity and a return to growth in thermal solutions. Management expects John Crane’s growth to be weighted toward the second half, while Flex-Tek’s is expected to be stronger in the first.

Smiths also launched a process to sell John Crane’s U.S. legacy asbestos liability. Fagge said related net cash outflows had averaged about £20 million annually over the past five years; the proposed sale is intended to reduce balance-sheet liabilities and cash-flow uncertainty.

Shareholders are set to receive a full-year dividend of 48.5 pence per share, up 5.4%. Smiths said a further £1.5 billion in share repurchases linked to the Detection sale remains, with substantial completion expected by the end of 2027.