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Smiths Group shares plunge after profits alert

By This Is Money
Updated: 03:19 EDT, 4 May 2011

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Smiths Group was the biggest loser on the stock market yesterday after it warned its airport security business would perform worse than hoped.

Sales flagging: Smiths Detection makes airport security equipment

The company announced the boss of the division, Stephen Phipson, is to step down.

Philip Bowman, chief executive of the whole group, will take over until a permanent replacement is found. Phipson's salary is not disclosed but he is on a 12-month contract so will receive a year's pay.

Smiths Detection, which makes X-ray scanners used at airports, accounts for just under 20% of group sales. It made £90m profit last year, but at the half-year point for this year, profit was down by 11% and that trend has continued into the second half.

Shares dropped 76p to 1256p. Sales have been flagging in the detection business due to a delay in government orders amid defence spending cuts.

The company's other businesses are not affected, including the Smiths' medical devices arm, which received a £2.45m bid approach from private equity firm Apax at the start of this year.

Smiths rejected the overture. Smiths Detection recently won a Queen's Award for developing the LCD (Lightweight Chemical Detector) which protects tens of thousands of soldiers against chemical weapons.

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