Smiths Group (AO) | Buy | Positive feedback from CFO tour

Research evidence excerpt

Smiths Group (AO) | Buy | Positive feedback from CFO tour

ars across the portfolio: John Crane

aftermarket and pricing, Flex-Tek Aerospace through engine platforms and MRO, and Thermal solutions through power generation, data-

centre cooling and electrification opportunities. The base case does not rely on a sharp rebound in US residential construction; rather, it

assumes gradual improvement and the ability to outgrow end-markets through product, channel and operational execution. For John

Crane, any recovery from current disruption is more likely to come through a repair/restart dynamic into 2027 than a sharp near-term

snap-back.

Near-term mix: Aerospace and aftermarket remain the key stabilisers

Near-term growth visibility appears strongest in Flex-Tek Aerospace, supported by high order coverage, long-term contracts, pricing

catch-up and volume commitments. Across the group, aftermarket remains the most accretive profit pool, underpinned by strong

pricing power and customer need for uptime/reliability. In John Crane, regional strength is visible in pockets such as Latin America, West

Africa/Nigeria and Brazil offshore, with Mexico reopening and some incremental activity into Venezuela also providing positive

dynamics.

Flex-Tek Aerospace contract renewals provide price catch-up and better forward protection

The pricing catch-up discussed was specifically linked to Flex-Tek Aerospace, where several long-term contracts are being renewed after

a period in which inflation was not fully recovered through 2023/24. The new agreements appear to embed improved pricing terms,

including better protection for input costs such as titanium, steel or gold, as well as stronger multi-year pricing mechanisms. This should