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Investing.com -- Shares of Smiths Group Plc (OTC:SMGZY) rose on Tuesday after the engineering firm reaffirmed its full-year outlook, despite a cyber security incident in January that disrupted operations at its John Crane division.
The company posted a 9.1% organic revenue increase for the first half of 2025, with operating profit margins at 16.7%, supporting its twice-raised full-year guidance.
The London-listed industrial technology firm reported £1.61 billion in revenue, slightly above consensus expectations of £1.60 billion. EBITA stood at £269 million, marginally missing the consensus forecast of £271 million, while earnings per share of 55.5p outperformed analyst expectations.
The cyber attack in January impacted John Crane, Smiths Group’s industrial seals and filtration division, as it disrupted shipments and affected profitability. Barclays (LON:BARC) analyst Jonathan Hurn noted that John Crane’s organic growth was limited to 3.8% in the first half as a result, and the company does not expect to recover the lost shipments in the second half.
Despite this setback, the company’s Interconnect division posted a strong performance, recording 26.8% organic growth, while Smiths Detection grew 15.3%.
However, the Flex-Tek unit saw its margin decline by 140 basis points year-on-year to 19.8%.
The earnings report was described as "in line" with expectations by RBC Capital Markets analysts who said the company’s break-up strategy remains on track.
The company reaffirmed plans to sell its Interconnect division by the end of 2025, while the future of the Smiths Detection unit remains under review.
Smiths also introduced new medium-term targets for its remaining businesses. RBC analysts pointed out that the company expects 5-7% organic growth, a rise from the previous 4-6% target, while profit margins are forecast to improve to 21-23% from the current 18-20%.
Barclays’ also noted that these new targets signal a higher profitability outlook, driven by improved cost efficiencies and a better divisional mix.
Smiths Group (LON:SMIN) maintained its full-year guidance for revenue growth of 4-6% and margin expansion of 40-60 basis points, despite the cyber incident’s impact.
RBC analysts stated that the company’s share buyback program has completed £150 million of its planned £500 million, and further bolt-on acquisitions, such as a £32 million deal for Flex-Tek, are expected to support growth.