Smiths Group issues profit warnings over issues with detection business

Smiths Group issues profit warnings over issues with detection businessSmiths Group has said its operating profit might be impacted this year due to issues relating to its detection business.

The leading maker of airport security scanners said that its operating profit might take a cut of £15 million following long-running disputes from its detection division. The company provides scanners in airport security, at ports and at border check-points across the world and devices for detection of explosives and weapons.

However, the company only receives payments for the equipment after it is installed and thus it is receive the amount due to it under the three contracts, resulting in lower operating profit this year. the company also has to bare the huge legal costs and it is not known if it will b able to recover the entire cost in the future.

"Trading for all divisions, except Smiths Detection, has continued broadly in line with expectations. Smiths Detection has identified that the final outcome of three contractual commitments entered into prior to 2010 are anticipated to be materially adverse to previous expectations," the company said on Wednesday.

It also said that Smiths Detection has made other provisions for associated with certain legal disputes and thus the headline operating profit of the group would be £15million lower than expectation.