Smiths warns profits will be hit by problems in detection division

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The airport security-scanner maker Smiths Group warned that problems at its detection business would knock £15m off operating profit this year.

The FTSE 100 engineer said the “final outcome” of three contracts at its detection division, which makes sensors that track explosives and weapons at airports, military checkpoints and borders and accounts for nearly a fifth of its total revenues, would be “materially adverse” to earlier expectations.

The deals are understood to be port, border and airport detection systems that are costing more than expected because of foreign exchange movements, software problems and delays in being paid. As a result of wrangling about payments, Smiths said its lawyers were also involved.

Its headline operating profit is set to be up to £15m less than the £575m expected for the year to August. The three contracts involved are thought  to be long-term deals, signed before 2010.

Shares in Smiths, whose products range from surgical needles to electric car batteries, fell 14p to 1,377p.