Slimmed-down industrial engineer Smiths Group (LON:SMIN) delivered FY results which beat forecasts and extended its share buyback. Having sold its Interconnect and Detection units for a combined enterprise value of £3.3 billion, the firm has steadily been returning cash to shareholders.
Results beat forecasts
For the year to July 2026, Smiths Group posted a 2.1% increase in revenue to £1.94 billion, ahead of market forecasts. CEO Roland Carter described the beat as ‘a resilient performance in the face of ongoing macro uncertainty’.
Organic revenue growth of 1.2% slightly undershot the market’s target of 1.4% but was impacted by the Middle East conflict. Notwithstanding, the John Crane engneering business delivered 2.3% organic growth thanks to strong Americas and OE (original equipment) sales.
Operating profit rose 2.7% to £399 million, comfortably ahead of forecasts of a flat performance on FY25. The operating margin increased slightly to 20.6% while return on capital employed rose to 23.5%.
Smiths Group FY26 results on a continuing operations basis
| FY26 | FY25 | Change | |
| Revenue (£m) | 1,937 | 1,898 | +2.1% |
| Operating profit (£m) | 399 | 388 | +2.7% |
| Operating margin | 20.6% | 20.5% | +0.1% |
| EPS (p) | 86.8 | 81.9 | +6.0% |
Source: Company accounts
Confident outlook
Looking to FY27, the CEO admitted underlying market conditions remained ‘challenging’. However, the firm’s ‘robust’ order book and business momentum mean it expects organic revenue growth of around 4% and an operating margin of 21% this year.
Part of that uplift will come from the integration of DRC Heat Transfer, acquired for £165 million. This takes the firm into the high-growth cooling and data centre markets, while demand for energy security solutions continues to grow.
Carter is also sticking by his medium-term targets of 5% to 7% organic revenue growth and 21% to 23% operating margins. In a final piece of house-keeping, the firm is looking to divest its US asbestos liabilities of around £150 million.
Buyback extended
After selling the Interconnect and Detection businesses, Smiths returned £1 billion of the proceeds to shareholders in FY26. Added to the £500 million of capital returned during FY25, this makes a total of £1.5 billion.
A further £1.5bn is still to be executed in relation to the Smiths Detection proceeds. The new buyback programme will start immediately and is expected to be substantially completed by end of 2027. At its July general meeting the firm asked for permission to increase repurchases ‘at pace’.
FY26 marked Smiths’ 175th anniversary, which in itself is a major achievement. But leaders don’t maintain their lead by standing still, and the group has been been through quite a transformation in the last year.
It’s now a focused engineering firm consisting of a high-quality portfolio of businesses with market-leading positions and attractive end markets. Margins have improved and are expected to continue improving over the medium term while recurring cash flows provide resilience.
Getting rid of the John Crane asbestos liabilities will increase free cash flow, improve earnings visibility and clean up the balance sheet. Meanwhile, shareholders can expect to benefit from a further £1.5 billion of buybacks so there is a lot to like about the ‘new’ Smiths Group.
