Trading Statement

RNS Number : 5246E
Spirax-Sarco Engineering PLC
09 May 2017



News Release


Tuesday 9th May 2017


Consistent performance, overall expectations unchanged


Spirax-Sarco Engineering plc, the world leader in the control and efficient use of steam and in peristaltic pumping and associated fluid path technologies, issues the following trading update in respect of the period ended 30th April 2017. 



As anticipated, organic* sales growth for the Group in the first four months of the year was above that of the same period in the prior year due to the more benign industrial production background and an uncharacteristically weak first four months of 2016.  We believe that the phasing of sales in the current year will be more closely aligned to historic patterns than seen in 2016 when we experienced an unusually weak first quarter and an unusually strong second quarter.


In response to the improving economic background and against a weak comparison for the same period in 2016, all geographic segments of the Steam Specialties business are showing organic growth with a particularly good performance from Asia Pacific, driven by China and Korea, which benefited from the shipment of large projects secured in 2016.  In EMEA, sales grew in the majority of our territories with the region as a whole showing growth above last year's levels.  As expected, the high levels of organic growth seen in the Americas during 2016 have slowed, as inflation in Argentina has reduced and the country's currency stabilised.  In the USA sales were flat although we have seen the beginnings of a recovery in sales to our distributor network.


The Watson-Marlow Fluid Technology Group continues to deliver strong organic growth although, as expected, not at the levels seen in 2016.  The Aflex acquisition continues to perform well, in line with our expectations.


Following the UK's referendum to exit the European Union and the subsequent devaluation of sterling in the middle of last year we have continued to experience a significant currency tailwind.  However, since the announcement of our preliminary results in March, sterling has generally strengthened against the basket of currencies we trade in.  If recent foreign exchange rates continue for the rest of the year we would expect to see a total uplift in sales and profits of 5% and 8% respectively for 2017 compared to 2016, with the majority of the benefit being seen in the first half of the year. 


On an organic, constant currency basis, Group operating profit is ahead of the comparable four-month period in 2016.  We will continue to prioritise investments for growth over further margin expansion as the year progresses.


Financial position

Our business remains highly cash generative and we maintain a strong balance sheet, with a net cash balance of £60 million at 30th April 2017, prior to the acquisition of Gestra on 3rd May 2017.  There has been no material change in the financial position of the Group during the period.



On 3rd May the Group announced the successful completion of the acquisition of Gestra for a cash-free, debt-free consideration of €186 million (£160 million). 

Gestra, headquartered in Bremen, Germany, is a technology leader in advanced industrial boiler control systems and specialises in the design and production of valves and control systems for steam and fluid process control. The business is highly complementary to the Spirax Sarco Steam Specialties business and will enhance and accelerate the implementation of Spirax Sarco's strategy for growth, as a result of its well-developed capabilities in a wide range of industries and applications.

We have already started working with our new colleagues to implement our growth plans.



Increasing Industrial Production growth rates have, as expected, provided an improving operating environment in the first four months of the year, positively impacting the Group's results.  Organic growth rates in the Steam Specialties business have been accentuated by the slow start seen in 2016 and we would expect these to moderate by the half year, due to last year's strong second quarter.  The Watson-Marlow business continues to show good growth but, as anticipated, at a reduced rate to the prior year.  We are pleased with the Gestra acquisition that along with the acquisition of Aflex in late 2016 is expected to deliver high single-digit inorganic growth in the year.


We have good diversification across market sectors and geographic regions and remain focused on our strategies for growth.  While, as normal, we continue to have limited visibility, with short order books, the Group's fundamental strengths stand us in good stead to continue to deliver growth that outperforms our markets.  Our overall expectations of organic growth for the full-year are unchanged and provided there is no material deterioration in trading conditions the Board has confidence that the Group will make further progress in 2017.


Spirax-Sarco Engineering plc expects to publish its 2017 half-year results on Wednesday 9th August 2017.



Nicholas Anderson, Chief Executive

Kevin Boyd, Group Finance Director

Tel:  01242 535234



* References to organic changes are excluding acquisitions and disposals, and are expressed at constant currency.

References to profit are to adjusted profit that excludes the amortisation and impairment of acquisition-related intangible assets and acquisition and disposal costs, together with the tax effects of these items.


About Spirax Sarco

Spirax-Sarco Engineering plc is the world leader in each of its two businesses, Spirax Sarco for steam specialties and Watson-Marlow Fluid Technology Group for niche peristaltic pumps and associated fluid path technologies.  The Steam Specialties business provides a broad range of fluid control products, engineered packages, site services and systems expertise for a diverse range of industrial and institutional customers.  The Company helps its end users to improve production efficiency, reduce energy costs, water usage and emissions, improve product quality and enhance the safety of their operations. Watson-Marlow Fluid Technology Group offers the ideal solution for a wide variety of demanding fluid path applications with highly accurate, controllable and virtually maintenance free pumps and associated technologies.  The Group is headquartered in Cheltenham, England, has strategically located manufacturing plants around the world and employs over 5,900 people, of whom more than 1,400 are direct sales and service engineers.  Its shares have been listed on the London Stock Exchange since 1959 (symbol: SPX).

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