(Sharecast News) - Smiths Group said it would cut jobs as part of a plan to reduce costs by £70m as the engineering company reported a slowdown in business because of Covid-19.
The FTSE 100 group said its restructuring programme would cost about £65m spread over 2020 and 2021. Savings will substantially offset costs in 2021 with the full £70m benefit feeding through the year after, Smiths said. It gave no details but said there would be job cuts.
Andy Reynolds-Smith, Smiths' chief executive, said: "We will continue to take the actions necessary to safeguard our long-term competitiveness. I very much regret that this will result in some job losses. My sincere personal thanks go to the amazing Smiths employees around the world for their dedication and commitment."
In the 10 months to the end of May underlying revenue from continuing operations rose 2%. Reported year-to-date revenue rose 6% including 3% from the acquisition of United Flexible. For the first four months of the second half underlying revenue rose 1%.
Smiths said its resilient performance during the Covid-19 crisis reflected momentum built up in the first half and strong order books at the start of the emergency and that trading was now tougher. The US John Crane seals and fastenings business increased revenue in the year to date but business has slowed recently because of disruption to customer service.
After a good first-half performance the Flex-Tek fluid and gases business has been hit by the downturn in commercial aerospace and disruption to US construction. Interconnect revenue was affected by market weakness in the first half but orders and revenue have improved recently, Smiths said. Detection has performed well, it said.
"There has been some slowing, due to the impact on our operations and those of our customers. We also face increasingly tough comparators through the end of the fiscal year," Smiths said. "We are currently operating in all our 75 manufacturing plants, but are not immune to higher consequential costs."
BROKER RATINGS: Barclays upgrades Shell and EnQuest to Overweight