Engineering firm Smiths Group sees profits and sales stall as currency fluctuations take their toll 

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Engineering conglomerate Smith Group has become the latest firm to be hit by global currency movements as sales and profits stalled.

The company, which makes airport scanners and medical devices, said pre-tax profits for the half year slipped from £132million to £131million.

Revenues rose 1 per cent to £1.4billion when currency movements were stripped out, but fell 2 per cent once they were included.

Long history: Workers gather outside Smiths' London factory in 1916

Most of the company’s income is in US dollars, which means that it is impacted by the changes in the value of the greenback.

It is on the hunt for replacements for both chief executive Philip Bowman, who retires at the end of the year, and finance chief Peter Turner, who is leaving ‘to pursue opportunities outside the group’.

Smiths yesterday also announced that its medical arm’s finance director Rob White will take up the finance position on an interim basis.

Trading in its scanner arm, which makes devices to detect bombs and drugs, had been slow but was ‘stabilising’, while its Interconnector division – which makes components for the rail and telecoms industries, also struggled.

Energy division John Crane, which accounts for a third of the company, saw sales rise by just 1 per cent.

But the group’s overall margins fell from 17 per cent to 16.4 per cent after its scanners and connectors units suffered.

The company vowed to have a better second half of the year.

Bowman said: ‘The results were held back by adverse foreign exchange.

‘Improvements at Smiths Medical, John Crane and Flex-Tek more than offset revenue declines at Smiths Detection and Smiths Interconnect where tough trading conditions persist.’

Shares, which have fallen 13 per cent in the last year, slipped 4p to 1174p, valuing the group at £4.6billion.

Analyst Michael Blogg at Investec said: ‘A stronger recovery than we expected at Smiths Medical has been offset by a greater than expected decline at Interconnect.’

He also said there was a ‘greater risk’ of government spending cuts impacting the group in the future, especially because of its exposure to the aerospace industry through its connector business.

The company started life in 1851, when Samuel Smith opened a jewellery shop in south London.

It floated on the London stock exchange just days before the outbreak of the First World War, but has diversified to become one of the FTSE 100’s largest and most diverse firms.

Bowman, who took over eight years ago, had been expected to break up or sell the sprawling FTSE giant, as he had done with previous firms including selling ScottishPower to Spanish firm Iberdrola and offloading drinks giant Allied Domecq to France’s Pernod Picard in 2005.

But talks to sell Smiths’ medical division to San Diego group CareFusion broke down two years ago, ending dreams of splitting the group apart.

The division, which pioneered IVF treatment, could have fetched as much as £3billion for the company.