An ongoing shift to the east ensured Spirax-Sarco Engineering (SPX) overcame a big currency hit and weakness in Europe to post record numbers. This year has started well, too, and, just in case it had forgotten, a 100p special dividend reminds the City this steam pump engineer generates plenty of cash.
After removing £7.2m of restructuring costs, mostly in Europe, and £3.3m of acquisition-related charges, pre-tax profit inched up to £138.5m. It would have risen 5 per cent had it not been for the weak euro and Brazilian real, reversing a 4 per cent first-half decline. China, where Spirax is heavily exposed to Beijing's domestic consumption drive, and other emerging markets in south-east Asia such as South Korea take the credit. Even ignoring a currency tailwind, sales there jumped 12 per cent and underlying operating profit 11 per cent to nearly £44m. Together with its growing Watson-Marlow pumps business, China now makes up a tenth of all sales. Demand for pre-fabricated heat exchange packages, which improve efficiency and cut emissions, was especially strong.
In Europe, though, it couldn't be more different. There, project delays, customer destocking and falling sales in the UK and Spain left revenue down 2 per cent, once you strip out currencies, and profit dropped 4 per cent to £36.7m.
Broker Numis Securities expects adjusted pre-tax profit of £147.6m and adjusted EPS of 133.6p in 2013 (from 125.5p last year).
SPIRAX-SARCO ENGINEERING (SPX) | ||||
|---|---|---|---|---|
| ORD PRICE: | 2,648p | MARKET VALUE: | £2.07bn | |
| TOUCH: | 2,648-2,651p | 12-MONTH HIGH: | 2,663p | LOW: 1,888p |
| DIVIDEND YIELD: | 2% | PE RATIO: | 23 | |
| NET ASSET VALUE | 558p* | NET CASH: | £51.7m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p)** |
|---|---|---|---|---|
| 2008 | 502 | 85 | 78 | 33.3 |
| 2009 | 519 | 76 | 70 | 36.1 |
| 2010 | 590 | 124 | 113 | 43.0 |
| 2011 | 650 | 132 | 120 | 49.0 |
| 2012 | 662 | 128 | 116 | 53.0 |
| % change | +2 | -4 | -4 | +8 |
Ex-div: 17 Apr Payment: 17 May *Includes intangible assets of £89.6m, or 115p a share **Excludes special dividends of 25p in 2010 and 100p in 2012 | ||||
