TIDMSPX
RNS Number : 7088X
Spirax-Sarco Engineering PLC
10 May 2016
News Release
Tuesday 10(th) May 2016
AGM Statement - Trading Update
Continued progress despite challenging markets
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 30(th) April 2016. As
previously indicated, the requirement for Interim Management
Statements has been removed but it is our intention to provide
directional guidance via a trading update at this time of the year
and again in November.
Trading
Global industrial production growth* has remained at a very low
level of around zero growth, with a continued small deterioration
in developed (OECD) economies matched by a small overall
improvement in emerging (non-OECD) economies. Our markets in
Europe, Middle East and Africa (EMEA) are overall stable, with
industrial production growth of less than 1% but modestly picking
up in some markets. In the Americas, industrial production growth
has turned negative in North America and remains firmly negative in
Latin America. In Asia Pacific, industrial production growth shows
a small improvement due to an apparent modest recovery in China,
with Korea flat.
Total organic** sales growth in the four months ended 30(th)
April 2016 was in line with the full year 2015. There was a similar
pattern of growth, with Watson-Marlow Fluid Technology Group
(WMFTG) continuing to make strong organic sales progress in the
first four months, supplemented by the good contribution from the
three acquisitions made in 2015. In our steam specialties business,
organic sales were again broadly flat, with a continued pattern of
lower levels of large projects, offset by increased sales of
self-generated smaller projects and improved maintenance and repair
business. In EMEA, organic sales growth was modestly lower compared
with a relatively strong start in the prior year, especially in our
larger businesses in the UK and Italy. In Asia Pacific, organic
sales were slightly lower spread over a number of our smaller
companies, largely offset by small gains in China and Korea.
Organic sales were modestly ahead in the Americas due to further
gains in Latin America, which more than offset a small decline in
North America driven by lower distributor business to the oil, gas
and chemicals sectors.
Overall, currency movements have turned positive, increasing
sales on translation in the first four months by less than 1%
versus average exchange rates in the first half of 2015, with good
gains from the stronger US dollar and euro, largely offset by
weaker currencies versus sterling in most emerging markets.
Exchange rates deteriorated through 2015 and versus full-year 2015
average exchange rates, the gain on translation of sales was over
2%. The Group's acquisitions and disposals in 2015 added a net 0.6%
to sales for the first four months of 2016.
Group operating profit was ahead of the comparable four-month
period at constant currency*** due to continuing the performance
levels of 2015 and the benefit of stable material input costs. In
addition, we benefited from the non-repeat of the headcount
reduction costs in our UK steam specialties manufacturing business
that were taken within operating profit in the first quarter of
2015. As indicated in March, we increased our market development
expenditure and increased training and development investment in
line with our strategy for growth. Underlying operating profit
margin at constant currency*** was therefore modestly ahead of the
comparable period. Favourable currency movements increased reported
Group operating profit by 1% versus first half 2015 average
exchange rates and by 3% versus full-year 2015 average exchange
rates.
Financial position
Our business remains highly cash generative and we maintain a
strong balance sheet. Net cash at 30(th) April 2016 was GBP31
million compared with GBP5 million at 31(st) December 2015. If
approved at the AGM, the final dividend for 2015 of 48.2p per
share, totalling GBP35 million, will be paid on 27(th) May 2016.
There has been no material change in the financial position of the
Group during the period.
Outlook
Industrial production growth progressively slowed through 2015
but appears to have stabilised in the early months of 2016 showing
no further overall deterioration. However, the likely future path
of industrial production growth continues to be uncertain and we
remain vigilant, controlling cost closely. Our strategy is focussed
on self-generated growth to reduce reliance on the market and we
are investing resources into our strategic priorities to increase
the effectiveness of our highly trained direct sales force, broaden
the Group's geographic presence, leverage new product development
and optimise our supply chain, whilst developing a more
sector-aligned organisation.
We have a robust business model that generates engineered
solutions to meet our customers' needs for energy and CO(2)
reductions, water savings, increased productivity, enhanced
quality, reduced costs and compliance with increasing regulatory
requirements. Whilst we continue to have limited visibility, with
short order books, and markets remain lacklustre, we have good
diversification across market sectors and geographic regions and
will benefit from the cost saving actions taken in 2015. Provided
there is no material deterioration in trading conditions, the Board
expects to make progress in 2016.
Spirax Sarco expects to publish its 2016 first half-year results
on Tuesday 9(th) August 2016.
Enquiries:
Nick Anderson, Chief Executive
David Meredith, Director Finance
Tel: 01242 535234
Note: 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.
* References to Indutrial Production growth are as determined by
CHR Economics in its Global Industrial Production Watch
publication.
** References to organic changes are excluding acquisitions and
disposals, and are expressed at constant currency.
*** References to profit changes at constant currency take
account of both exchange translation and transaction effects.
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 over 4,800 people, of whom over 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
This information is provided by RNS
The company news service from the London Stock Exchange
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