Home Commodities Oil industry supplier Smiths boosted growth in non-Russian output

Oil industry supplier Smiths boosted growth in non-Russian output

by SuperiorInvest

A rush to find energy sources outside Russia helped push demand for oil and gas supplier Smiths Group’s products to record highs as its customers in other countries expanded production.

The FTSE 100 company said on Friday that the value of new orders received by its subsidiary John Crane, which sells mechanical seals for oil pipelines and gas pumps, rose by almost 11 percent in the year to July, with its order book hitting a record high. to date.

“[The business] it’s inundated with orders right now,” CEO Paul Keel told the Financial Times. “All non-Russian energy sources are increasing rapidly.” . . They are trying to replace a lot of lost capacity from Russia.

Keel said the need to increase energy production was linked to higher demand as countries exited Covid-19 lockdowns. He expected demand to remain elevated despite recent times sharp increase in energy prices.

After Moscow’s invasion of Ukraine, governments pledged elimination oil and gas imports from Russia, which has long been a key global supplier. But as energy consumption has grown, countries have been under pressure to quickly find alternative sources, pushing businesses outside Russia to increase production.

Smiths, an industrial conglomerate that also makes products including airport baggage scanners and satellite parts, said it had stopped sales to Russia this year and was in the process of winding down its business in the country. It said the move cost up to £19m and contributed to an overall 57 per cent drop in annual pre-tax profits to £103m.

Adjusted for exceptional costs, Smiths said profits rose 13 per cent to £372m. The company announced a full-year dividend of £142m, equivalent to 39.6p per share, up 5 per cent on the previous year.

The group’s shares rose 2 percent after the results were released.

Despite growing demand for her products, Keel admitted disruption in the global supply chain has limited the company’s ability to capitalize immediately.

Although orders across the group rose by more than 11 per cent during the year, sales rose by just 4 per cent as the supply chain crisis affected the number of products Smiths was able to supply.

“Some components are hard to come by, so that can make your supply chain less efficient,” Keel said. There are “hundreds of products we’d like to get tomorrow that we have to wait a week, a quarter, a month for.”

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