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Resilient Spirax-Sarco remains upbeat about 2016

Spirax-Sarco suffered at the hands of foreign exchange rates last year, but the underlying trends look good
March 4, 2016

According to analysts at Investec, engineering group Spirax-Sarco (SPX) "rarely disappoints" and certainly rings true in light of the 2015 results. The group outperformed market expectations, reporting adjusted pre-tax profit of £151m compared with consensus forecasts of £149.6m. Most of that can be explained by a record operating margin, a reflection of flat input costs and improved purchasing processes across the group.

IC TIP: Hold at 3,314p

However, reported sales and profit were hit by negative foreign exchange rates. Adjusting for this, and on a like-for-like basis, sales rose 2 per cent to £667m. Sales grew particularly strongly at the Watson-Marlow Fluid Technology Group (which manufactures positive displacement pumps), up 9 per cent on an underlying basis. The same can pretty much be said of the profit performance. At constant exchange rates, adjusted operating profit rose 4 per cent to £152m - again, thanks to a strong profit performance from Watson-Marlow.

Forecasts are under review, but Investec had expected pre-tax profit of £149m, giving EPS of 142p for 2016. That compares with £151m and 142p in 2015.

 

SPIRAX-SARCO ENGINEERING (SPX)

ORD PRICE:3,314pMARKET VALUE:£2.43bn
TOUCH:3,312-3,317p12-MONTH HIGH:3,637pLOW: 2,664p
DIVIDEND YIELD:2.1%PE RATIO:26
NET ASSET VALUE:542p*NET CASH:£5m

Year to 31 DecTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201165013212049.0
201266212411253.0
201368914613359.0
201467814513364.5
201566714013069.0
% change-2-4-2+7

Ex-div: 28 Apr

Payment: 27 May

*Includes intangible assets of £109m, or 148p a share