Yahoo Finance Smiths Group looks to build 'digital forges' to pioneer new tech
Engineering conglomerate Smiths Group is looking to attract programmers to help it develop life-changing equipment and beef up its digital skills.
The claim came from the FTSE 100 group’s chief executive Andrew Reynolds Smith as he set out Smiths’ annual results and tries to turn the business around.
Part of his strategy is launching what Smiths calls “digital forges” - research hubs working in artificial intelligence and big data - which can help develop new products and technologies to make the company an industrial leader.
“We’re trying to attract people who might otherwise go to Google or Facebook," said Mr Reynolds Smith. "We we're looking for people who can pull together the digital and physical worlds to help make products, which can you can touch and see doing work in the hospitals and airports.
“They will be doing some good rather than programming the next Angry Birds.”
Smiths reported underlying group revenue slipping 1pc to £3.28m as currency movements and acquisitions were stripped out, while pre-tax profit rose 17pc to £528m for the year to the end of July.
The company has five main businesses: John Crane, supplying components for the energy industry; detection, making airport and port security scanners; a specialty medical devices unit; Interconnect, which produces electronic components; and Flex-Tek, which makes hoses used in industry and vehicles.
Mr Reynolds Smith came on board two years ago with a remit to “build and grow” the business after years in the doldrums and amid speculation that it would be broken up.
He has focused on selling off smaller, non-core or underperforming parts of the business and strengthening areas with high potential through acquisition and investment.
This has included the £590m purchase of US security scanning business Morpho and taking R&D spending to 4.6pc of sales, as well as setting up a technology investment programme.
The largest business in the group, John Crane, suffered a 4pc fall in underlying revenue to £885m during the year, as the low oil price continued to weigh, though the company said the rate of decline was slowing.
The medical unit’s sales were 3pc lower at £951m, but Mr Reynolds Smith said a three- to five-year “refresh” of half of the product range was well under way and should see declines reverse in the first half of the coming year. Delays in launching new products also lowered performance.
The detection business is currently integrating Morpho and revenues rose 4pc to £687m. Current security concerns mean detection is a growth opportunity, with Smiths developing full service and intelligent products instead of just selling machines.
“The law says every European airport must have computerised tomography (CT) scanners in place by 2022, and before that legislation the number was in low-single digits,” the chief executive said, pointing to one opportunity for the business.
He added that Smiths was using artificial intelligence to make its port scanners intelligent, so rather than sampling containers on a random basis, their journeys are tracked and those that could be at risk are singled out for inspection.
However, despite the upbeat tone from management, investors were less confident, with the shares slipping more than 6pc.
Analysts at Jefferies called update “satisfactory”, while Morgan Stanley said it saw little in the results to change the view that Smiths was failing to ride the improving trend in the sector.
