Smiths to offload medical unit; Q1 revenues down 1%

In a separate trading statement, the company said it expected to meet full year expectations based on first quarter performance where revenue for the three months to end October fell 1% on an underlying basis.

Smiths said it expected to at least sustain a full year underlying growth rate, with performance weighted towards the second half.

Revenue in the medical division during the quarter was impacted by “regulatory and contract challenges which are progressively abating” and remained on track to return to growth in the second half, the company said.

The decision to separate Smiths Medical would help it “deliver on its full potential, capitalising on its leading positions, large programme of new product launches and to exploit value creating opportunities in its rapidly changing market”, the company said.

It added that separation planning was at an early stage.

Chief executive Andy Reynolds Smith said the planned separation would “strengthen both Smiths and Smiths Medical as they each focus on accelerating the execution of their plans and maximising the opportunities in their respective markets”.

Smiths Medical supplies medical pumps, catheters and syringes and saw annual 2017/18 sales fall by 2% after the loss of two contracts in the US during the year and changes to EU rules on medical devices which resulted in the suspension of some of its products.

Earlier in the year talks with US-based ICU Medical Inc over a possible £7bn merger of their healthcare businesses had fallen through.EU regulation.

In its first quarter trading update, Smiths said revenue at its detection unit was impacted by the phasing of orders, with an expected strong second half supported by a “robust” order book.

“Smiths Interconnect delivered strong growth, with a good performance in Space and favourable phasing,” the company said.

“Flex-Tek continued to deliver good organic growth, driven by heat solutions and flexible gas tubing.”