UK engineering firm Smiths Group’s aerospace operating profit fell 4% on increased research and development costs in the first six months of its 2005-6 financial year, as sales rose 10%. Smiths recorded a 22% increase in group operating profits to £194 million ($337 million) for the six months ending 31 January, on the basis of a 22% increase in group sales to £1.59 billion. Within its aerospace operations, sales rose 10% to £559 million. But headline operating profit was 4% down at £43 million. “Profitability was held back by an increase in development costs charged to profit. Additionally, UK exports in this period had been secured at less favourable exchange rates than in the prior period,” the company says. Smiths has raised its research and development investment levels, notably relating to the Airbus A380, Boeing 787 and KC-767 tanker programmes. “The outlook for Smiths Aerospace is for sustained growth and increased returns, driven by positive market dynamics and by the increase in business resulting from R&D investment,” it says.

Source: Flight International