Smiths Group Plans £1.5bn Shareholder Return After Major Divestments

The Tip Desk · March 20, 2026 · 2 min read

The company announced a further £1.5bn to be returned to shareholders following the sale of Smiths Detection and Smiths Interconnect for a combined £3.3bn.

Smiths Group Plc, a focused industrial engineering company, announced the agreed sales of Smiths Interconnect and Smiths Detection for a combined enterprise value of £3.3bn. The company is returning a large portion of these proceeds to shareholders, launching a CY2026 £1bn share buyback and announcing an additional £1.5bn to be returned via a combination of a structured return and further buybacks through CY2027.

Total Group revenue for the six months ended 31 January 2026 rose 4.0% on an organic basis to £1,437m. Headline operating profit for the group increased 7.2% organically to £248m, with the operating profit margin rising 50bps to 17.2%. Total Group headline EPS grew 11.7% to 62.0p. The company also increased its dividend by 5.4% to 15.00p.

Performance varied across the portfolio. Smiths Detection delivered 11.7% organic revenue growth, driven by aviation demand for CtiX scanners, and saw its headline operating profit margin increase to 13.8%. John Crane reported mid-single digit growth in the second quarter, with an organic margin expansion of 50bps to 23.2%. Flex-Tek experienced strong growth in aerospace, though this was offset by weakness in the US construction market. Flex-Tek's headline operating profit margin declined to 20.4%.

As part of a strategy to high-grade its portfolio, the company is divesting certain general industrial businesses within Flex-Tek. These businesses are now classified as discontinued operations and contributed £25m to revenue with a £2m operating loss in the first half. To expand into higher growth adjacencies, the company signed an agreement in March to acquire DRC Heat Transfer for £164m.

Free cashflow generation decreased to £74m from £143m in the prior year, reflecting separation costs and the Acceleration Plan. Headline operating cash conversion was 78%, compared to 94% in the previous period, as the company increased inventory levels to improve order book delivery.

For the full year 2026, the company updated its outlook to exclude Smiths Detection. It expects organic revenue growth of 3-4% for continuing operations, with second-half growth expected to fall within its medium-term target range of 5-7%. The company expects a headline operating margin of approximately 20% for the year.