AGM Statement

RNS Number : 7085M
Spirax-Sarco Engineering PLC
11 May 2015



News Release


Monday 11th May 2015



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 AGM Statement in respect of the four month period from 1st January 2015 to 30th April 2015, ahead of its Annual General Meeting ("AGM") today at 2.00pm.



Growth in industrial production and the global economy generally has further eased, continuing the slow down in growth through the second half of 2014, in both developed and especially emerging markets.  Our markets in Europe, Middle East and Africa (EMEA) look to have stabilised, albeit at low levels of industrial production growth.  Markets in Asia Pacific have shown a further slowing of industrial production growth, particularly in China, Korea and Australasia.  In the Americas, industrial production growth has weakened in North America and remains negative in South America.


For the four months ended 30th April 2015, Group organic sales increased by 4%.  Currency headwinds have largely abated, although sales have been reduced by 1.8% on translation compared with the average exchange rates for the first half of 2014; gains from the stronger dollar have been more than offset by the impact of the weaker euro.  The normal seasonal increase in our Group order book in the early months of this year has been at a lower level than the strong order build at this time in 2014.  Our Watson-Marlow Fluid Technology business has again performed strongly, growing sales in all geographic regions.  In our steam specialties business, organic sales growth has been more muted with overall project work again reduced but day-to-day maintenance and repair business increased.  We have seen a small impact from the lower oil price, particularly in Korea and Brazil, but the correlation between the price of oil and our sales remains weak as we work with customers to deliver many other benefits in addition to energy reduction.  EMEA performed well against a background of low industrial production growth.  We achieved modest organic sales growth in the Americas, with a better performance in Latin America but organic sales in North America were lower against a strong start in the prior year.  Organic sales were reduced in Asia Pacific due to a slower start to the year in Korea; sales in China were overall stable.


Group operating profit was ahead of the comparable period in 2014, both on a reported and constant currency basis, reflecting the contribution from higher sales and relatively flat material input costs.  This was partially offset by increased investment in our strategic priorities to support growth and the previously reported one-off headcount reduction costs of around £1 million in the UK steam specialties manufacturing business, where annualised benefits of £2 million per annum will accrue from April 2015.


Financial position

The Group remains highly cash generative and maintains a strong balance sheet, with the net cash balance increasing from £52 million at 31st December 2014 to £82 million at 30th April 2015.  In April, we completed the acquisition of Asepco in the USA for £7.0 million, which specialises in the design and manufacture of high purity aseptic valves for the biotechnology and pharmaceutical industries and will operate as part of our Watson-Marlow Fluid Technology Group.  If approved at the AGM, the final dividend of 45p per share in respect of 2014, totalling £34 million, will be paid on 29th May 2015, and a special dividend of 120p per share in respect of 2014, totalling £91 million, will be paid on 15th July 2015.  There has been no material change in the financial position of the Group during the period.



The overall economic and market growth conditions in the early months of this year are a little less favourable than expected, reflecting the slower growth in Asia and the Americas.  Our business, in general, tends to lag economic movements by a couple of quarters, however, we have good diversification across market sectors and geographic regions, and anticipate a pick-up in industrial activity in the second half of 2015.  If recent exchange rates prevail for the full year, the negative translation impact on sales will moderate to a little less than 1%.  Whilst markets remain lacklustre, we remain focused on our strategic priorities to generate our own growth and outperform our markets, which, together with our fundamental strengths, gives the Board confidence that the Group will make further progress in 2015. 


Spirax Sarco will publish its half-year results on 5th August 2015.




Nick Anderson, Chief Executive

David Meredith, Director Finance

Tel:  01242 535234





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 customers 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 approximately 4,800 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)

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