Interim Management Statement

RNS Number : 4013S

Spirax-Sarco Engineering PLC

07 November 2013

 



 

 

News Release

 

Thursday 7^th November 2013

INTERIM MANAGEMENT STATEMENT

Strong financial performance against challenging market backdrop

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 1st July 2013 to 6th November 2013.

Trading

In the four-month period ending 31st October, organic sales were 4% higher than the prior year, as sales growth continued at the same pace as the first half-year.  Asia Pacific sales growth was higher in the period, reflecting the benefit of project shipments from orders booked in the first half and continued strong growth in China.  Sales grew modestly in each of our EMEA and Americas segments, similar to the rates of growth in the first half.  Demand remained soft in North America but the lower sales were more than offset by growth in Latin America.  Our Watson-Marlow pumps business faced a particularly difficult comparison due to several large, non-repeating wastewater treatment and mining projects that shipped in the period last year.

Recent improvements in global economic conditions have had little overall impact on our markets.  Conditions in our mature markets in Europe and North America remain challenging - routine customer maintenance spending has continued stable and resilient but higher value energy saving and plant improvement expenditures are at low levels.  Conditions are quite varied in our emerging markets, where we have seen improvement in Southeast Asia and Eastern Europe but recent weakening of conditions in Latin America.

Currency movements have been favourable so far this year, adding less than 2% to sales growth.  However, the recent strength of sterling and weakness in some emerging market currencies will, if maintained, erode this favourable currency gain to around 1% for the full year.

Our trading performance in the four months ended 31st October 2013 was in line with our expectations.  Efficiency improvements in our European manufacturing operations and the cost savings from last year's restructuring in our European sales companies are reflected in higher Group operating margins that remain comfortably ahead of the prior year.  As noted previously, our normal seasonal profit bias towards the second half-year was exaggerated in 2012 and we expect that 2013 will revert to a normal first-half/second-half profile.

Financial position

Our balance sheet and cash flow remain strong with a net cash balance of £22 million at 31st October 2013, having paid the special dividend of £78 million in July.  The interim dividend of 18p per share in respect of 2013, totalling £14 million, will be paid on 8th November 2013.  There has been no material change in the financial position of the Group during the period and the principal risks and uncertainties remain as set out on pages 55 to 59 of the 2012 Annual Report.  Under new Corporate Governance rules, we are in the process of tendering the Group audit in respect of the period commencing with the 2014 audit and expect to reach a conclusion by the end of this year.

Outlook

Our markets tend to broadly mirror general economic activity and rates of industrial production, which we expect to exhibit continued low levels of growth for the balance of this year.  Our focus remains on generating our own growth through our strategic priorities of expanding our presence in emerging markets, delivering a broader range of energy saving and plant improvement solutions, and growing market share.  Despite sluggish markets and erosion in favourable currency movements, the Board remains confident that the Group will make good progress in 2013.

Enquiries:

Mark E Vernon, Chief Executive

David Meredith, Director Finance

Tel:  [phone]

Note:  References to profit are to adjusted profit that excludes the amortisation of acquisition-related intangible assets, acquisition and disposal costs, and contingent consideration fair value adjustments, together with the tax effects on these items.

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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