LONDON (Reuters) -British engineering company Smiths Group (LON:SMIN) forecast further growth this year from the drive to decarbonise among its industrial customer base, after it reported a rise of a fifth in annual profit.
The FTSE 100 group makes highly engineered seals, filters and electric heating elements used in clean hydrogen, carbon capture, and zero emission steel mill projects among other areas.
"The energy transition, people used to talk about that as being the future, that future is very much here today," Chief Executive Paul Keel said in an interview on Tuesday.
About 20% of Smiths Group's total revenue of 3 billion pounds for the 12 months to the end of July came from decarbonisation, he estimated, adding that he expected that share to keep growing.
The company generates more than half its revenues from the Americas, where its business has benefited from the Inflation Reduction Act in the United States that offers federal funding of nearly $400 billion for clean energy and technologies.
Green energy trends coupled with demand for Smiths' airport scanners - its technology eliminates the need to take liquids out of bags for security checks - were offsetting the impact on its business from the softer semiconductors market, Keel said.
For the current financial year, Smiths guided to organic revenue growth of 4% to 6% and said profit margins would strengthen.
It reported operating profit of 501 million pounds ($610.57 million) for its last year and raised its final dividend by 5%.
Shares in Smiths Group were flat in early deals.
"We view the strength of these results, and the accompanying guidance, as clear evidence that Smiths Group is entering a structurally higher growth phase," Goldman Sachs (NYSE:GS) analysts said.
($1=0.8205 pounds)