Nick Anderson has only been in the job seven weeks, but Spirax-Sarco’s (SPX) new boss has no plans for major changes. Why would he? Last year was another of record sales, profits and margins, due in no small part to Mr Anderson’s restructuring efforts while running the steam and pump engineer’s European operation.
Delivering the final tranche of a £5.5m cost-saving exercise on the continent swelled operating margin at the region’s steam business by 350 basis points at constant currency. Unsurprisingly, adjusted operating profit surged by over a quarter to £48.2m, and shedding lower-margin work should help maintain returns at group level at around 22 per cent. Pumps division Watson-Marlow inflated margins, too, driven by new products like the Qdos peristaltic pump.
Overall, Spirax grew underlying pre-tax profit by a tenth to £152m. Broker Numis Securities, however, believes the strong pound will snuff out much of the anticipated underlying growth this year. It’s pencilling in adjusted pre-tax profit of less than £153m for 2014, giving adjusted EPS of 139p, effectively flat on last year.
Of course, that may prove conservative, especially if the nascent recovery in European industrial production, which Spirax typically lags by about nine months, gathers momentum.
SPIRAX-SARCO (SPX) | ||||
---|---|---|---|---|
ORD PRICE: | 3,050p | MARKET VALUE: | £ 2.3bn | |
TOUCH: | 3,044-3,052p | 12-MONTH HIGH: | 3,214p | LOW: 2,432p |
DIVIDEND YIELD: | 1.9% | PE RATIO: | 23 | |
NET ASSET VALUE | 534p* | NET CASH: | £16.4m |
Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p)** |
---|---|---|---|---|
2009 | 519 | 76 | 70 | 36.1 |
2010 | 590 | 124 | 113 | 43 |
2011 | 650 | 132 | 120 | 49 |
2012 | 662 | 124 | 112 | 53 |
2013 | 689 | 146 | 133 | 59 |
% change | +4 | +17 | +19 | +11 |
Ex-div: 30 Apr Payment: 30 May *Includes intangible assets of £90.4m, or 120p per share **Excludes special dividends of 25p in 2010 and 100p in 2012 |