Smiths Group cuts revenue guidance as Middle East war hits John Crane

(Alliance News) - Smiths Group PLC on Thursday lowered its revenue guidance for the current financial year due to the impact of the conflict in the Middle East.

The London-based engineering company said it now expects organic revenue growth of around 2% in the financial year to the end of July. It previously guided for organic revenue growth between 3% and 4%, excluding any impact from the conflict in the Middle East.

It now expects the headline operating profit margin to be "slightly above" 20%, up from 17.4% in financial 2025. The firm previously guided the operating profit margin to be around 20%.

Smiths Group said organic revenue growth was flat in the third quarter to May 2, leading to 0.2% growth for the nine-month period.

"This performance was achieved in the context of the disruption in global energy markets, a subdued US construction market and a strong comparator in Flex-Tek," the firm said.

Reported revenue for the quarter included a 2.1% benefit from acquisitions, and 1.6% in the nine-month period.

In the John Crane unit, organic revenue was up 2.8%. Revenue was impacted by GBP10 million after two months of disruption from the Middle East conflict, Smiths Group said.

Flek-Tek organic revenue fell 3.9% against a high-single-digit prior year comparator.

Smiths Group noted that the conflict creates "near-term headwinds", but also creates opportunity for "incremental investment" as the region rebuilds.

The Middle East region represents around 7% of revenue for Smiths Group, primarily from John Crane.

"Whilst this moderates growth in the near term, it is set against a backdrop of increasing global demand for energy security and resilience, and we are well positioned to support our customers. This underpins our confidence in the strength of our medium-term growth outlook," said Chief Executive Officer Roland Carter.

"We continue to make good progress reshaping the portfolio, deploying capital with discipline and investing to drive sustainable growth and long-term shareholder value."

Shares in Smiths Group were up 0.2% at 2,485.00 pence on Thursday morning in London.

By Michael Hennessey, Alliance News reporter

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