Fears about the impact oil price volatility could have on engineering conglomerate Smiths (SMIN) sees its share price tumble 4% to £10.82 this morning.
Smiths’ recent trading updates have shown good performances in the medical and Flex-Tek divisions but many analysts have voiced concerns about oil price volatility impacting its oil services business.
On 21 May Smiths said its John Crane division, which serves energy companies like BP (BP.) and Total (TTA), had joined its Detection and Interconnect divisions in recording falling sales for the first nine months of the year due to cutbacks in the oil and gas sector.
Rotork, which produces devices for opening and closing pressure valves in shale oil extraction equipment, today warned its profits would be lower than consensus forecasts as a result of a challenging second half which saw project deferrals and cancellations.
Around 57% of Rotork’s sales are into the oil and gas markets compared with around 20% at Smiths, according to figures from RBC Capital Markets.
The analyst has re-issued an ‘underperform’ rating on Smiths.