Interim Management Statement

RNS Number : 4867Q

Spirax-Sarco Engineering PLC

07 November 2012

 



News Release

 

Wednesday 7^th November 2012

INTERIM MANAGEMENT STATEMENT

Spirax-Sarco Engineering plc, the world leader in the control and efficient use of steam and in peristaltic pumping, issues the following Interim Management Statement in respect of the period from 1^st July 2012 to 6^th November 2012.

Trading

In the four months ended 31^st October, organic sales increased 6%, ahead of the rate of growth reported in the first half year.  Notably, Asia Pacific and Watson-Marlow achieved strong double-digit sales growth in the period, followed by a more modest advance in the Americas and slightly reduced sales in our Europe, Middle East and Africa (EMEA) segment.  Sales in sterling were ahead 2% in the first ten months of 2012, after including the impact of unfavourable currency movements and two small disposals last year.

As anticipated, our trading performance in the four months ended 31^st October improved with operating profit 8% ahead at constant currency.  Better results were particularly evident in Watson-Marlow, where the planned increases in R&D and market development costs in the first half year are unwinding in the second half.  Results also improved in EMEA, as the cost base in Europe is being progressively lowered and the profitability of our Supply operations increased.  For the ten months ended 31^st October 2012, operating profit was therefore 2% ahead of last year at constant currency, compared with a decline of 3% for the first half year.

Financial position

We continue to operate with a strong balance sheet and are steadily reducing and rebalancing our stock position in Europe, although this continues to have a negative impact on the factory loading in our main manufacturing plants in the UK and France.  Net cash balances at the end of October 2012 increased to £43m compared with £9m at 30^th June 2012, although the interim dividend of £12m will be paid on 9^th November.  There were no significant events or transactions during the period that resulted in a material impact on the financial position of the Group.  The principal risks and uncertainties remain those set out on pages 26 and 27 of the 2011 Annual Report.

Outlook

Global macro-economic conditions have weakened in recent months as reflected in slowing rates of GDP growth and industrial output in most geographic regions.  Trading conditions in many of our markets have, however, remained more resilient and we have not seen softening in underlying demand.  The Group has a favourable weighting to defensive industries such as food & beverage, pharmaceuticals and health care, and maintenance spending by our customers has continued to be positive, even against the deterioration in economic conditions.

Our business has other resilient characteristics due to our diverse geographic, industry, customer and product spread, and the large proportion of our sales that derive from maintenance or operating spend by our customers.  We are seeing the improvements in our Supply organisation from the site consolidation in the UK and from the previously announced cost reduction programme in Europe, which should be complete by the year-end.

Although our forward visibility remains short and we are not immune to a worsening in our markets, which can be reflected fairly quickly in our mid-cycle business, the Board continues to expect the Group to make progress for the full year.

Enquiries:

Mark E Vernon, Chief Executive

David Meredith, Director Finance

Tel:  [phone]

Note

All references above are to adjusted trading results that exclude non-operational items, including the previous announced restructuring costs, amortisation of acquisition-related intangible assets and acquisition and disposal costs.

About Spirax Sarco

Spirax-Sarco Engineering plc is the world leader in both steam system management and peristaltic pumping. The Company provides a broad range of fluid control products, engineered packages, site services and systems expertise for its diverse range of over 100,000 industrial and institutional customers. The Company helps its customers to optimise production capacity, reduce energy costs and emissions, improve product quality and enhance the safety of their operations.  Spirax Sarco is headquartered in Cheltenham, England, has strategically located manufacturing plants around the world and employs approximately 4,700 people, of whom around 1,300 are direct sales and service engineers.  Its shares have been listed on the London Stock Exchange since 1959 (symbol: SPX). Further information can be found at www.spiraxsarcoengineering.com 

 

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