UK's Smiths Group projects top-end annual sales growth, limited tariff hit

May 20 (Reuters) - Britain's Smiths Group SMIN.L said on Tuesday annual organic revenue growth would reach the top end of its 6%-8% forecast range, after demand for its baggage-screening kits and explosives detectors helped third-quarter sales jump 10.6%.

The engineering company said it expects limited impact from tariffs as a "significant majority" of its products sold in the U.S. are produced there, and would also manage the impact through pricing actions and surcharges.

"The group is closely monitoring the potential indirect macroeconomic impact of tariffs on demand, inflation and supply chains, and has not seen any material changes in customer behaviour to date," it said.

Shares in Smiths, which generates about 45% of its sales in the U.S., rose 4% in early trading.

The company's annual forecast, which includes expected margin expansion of 40-60 basis points, incorporates the direct impact of the current tariffs in place, Smiths said.

JPMorgan analysts noted that Smiths' current forecast implied fourth-quarter organic revenue growth of about 3%, which they called "cautious" given the uncertain economic environment.

Smiths said it still aims to sell the division which supplies electronic components by the end of 2025, and then separate the business which makes airport baggage-screening kits and explosives detectors through a demerger or sale.

In January, the company announced plans to break up after pressure from U.S. activist investor Engine Capital and focus on industrial technologies through its John Crane and Flex-Tek businesses.