Fri, 30 Sep 2016 | BUSINESS NEWS
Engineering and technology conglomerate, Smiths Group could be planning on making further acquisitions. The announcement comes after the FTSE 100 group agreed to purchase Morpho, a French aerospace group for $710m (£548m).
The group began as a jewellery shop 165 years ago and has a number of businesses ranging from X-ray scanners to heating elements and medical infusion pumps. As a result, city analysts have long assumed the company will break up.
Instead, chief executive Andrew Reynolds Smith has outlined a roadmap strategy where it hopes to achieve a top three leadership position in its market segments. Where it cannot reach the top three, it will dispense of these divisions.
The new roadmap comes after Smiths have revealed that current conditions on the energy markets have been tough on the group. With fewer orders of equipment in its business that supplies the oil and gas sector, the group’s operating margin has fallen 30 basis points to 17.3 per cent. In response, Smiths have stated it would look to increase sales in the chemicals, pharmaceuticals and pulp and paper.
Sales in the group’s other four divisions increased, revenue dipped to £2.95 billion. This was blamed on the weaker pound. Pre-tax profits, thanks to lower one-off costs, rose to 6.5 per cent to £346m over the previous year.
“We are in build and grow mode and we will be doing some pruning and grafting on the way,” said Mr Reynolds Smith.
“We see a potential roadmap to becoming one of the world’s leading technology companies, but we have to be more focused in how we invest and improve our competitiveness.”
On the back of this announcement, shares in the company rose 3.6 per cent on Wednesday to £14.37, giving a total market value of £5.7bn.
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