Smiths Group Plc (LSE:SMIN) has reduced its full-year FY2026 organic revenue growth forecast to around 2%, down from previous guidance of 3% to 4%, after disruption linked to the Middle East conflict negatively affected third-quarter trading.
The revised outlook fell short of analyst expectations of 2.8% organic growth, although it remained ahead of Jefferies’ forecast of 1.8%.
For the third quarter ended 2 May, organic revenue growth from continuing operations — comprising John Crane and Flex-Tek — was flat compared with the previous year. Across the first nine months of the financial year, organic revenue growth stood at 0.2%, while reported revenue growth reached 1.6%, supported by acquisitions.
Chief executive Roland Carter said, “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.”
Smiths said the Middle East conflict reduced John Crane sales by approximately £10 million during the quarter, with disruption lasting around two months. Despite this, the division still delivered organic revenue growth of 2.8%, while management highlighted continued strength in the order book and a positive book-to-bill ratio.
“JC was impacted by the ME, although the order book strengthened and book-to-bill was positive, while Flex-Tek saw ongoing sales declines yoy given a tough comp and challenging US construction market. There is nothing in here that should be a surprise to the Street, in our view, although sales expectations were a touch high,” said analysts at Jefferies.
Flex-Tek recorded an organic revenue decline of 3.9% during the quarter against a strong prior-year comparison. The construction segment continued to be affected by weakness in the U.S. residential housing market, although the company said sequential improvement from the second quarter is expected to continue into the fourth quarter, supported by pricing initiatives.
Within Thermal Solutions, revenue declined mainly due to the completion of a major ultra-high heating project in the prior year. Aerospace operations, however, delivered strong growth driven by execution of the order book and improved pricing and volumes following contract renewals.
On profitability, management now expects FY2026 headline operating margins to come in slightly above 20%, compared with previous guidance of around 20%. The updated forecast is marginally ahead of analyst consensus expectations of 20.1%.
Smiths also confirmed that the disposal of Smiths Interconnect to Mole was completed on 1 April and that £506 million of its planned £1 billion share buyback linked to the transaction has already been executed.
The regulatory approval process for the proposed sale of Smiths Detection remains ongoing, with completion currently anticipated during the second half of calendar year 2026.
More about Smiths Group
Smiths Group Plc is a UK-based engineering and technology group serving energy, industrial, aerospace and infrastructure markets. Through businesses including John Crane and Flex-Tek, the company provides engineered components, industrial technologies and specialised systems focused on energy efficiency, safety, connectivity and operational resilience across global markets.
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