Spirax-Sarco builds up steam

The group’s restructuring of its European operations in 2012 continued to pay off as it widened its underlying operating margin by 150 basis points to 21 per cent. It’s currently pursuing similar cost-cutting and pricing initiatives in North America, which could drive further gains.

Spirax-Sarco’s core steam segment increased underlying operating profit by a tenth, bolstered by 35 per cent profit growth in the Americas. And Watson-Marlow, the pump division that chief executive Nick Anderson calls “the gem in our business”, grew underlying operating profit by 18 per cent and widened its margin to nearly 30 per cent. These gains reflected strong sales of its Qdos pumps and Flexicon filling systems, as well as the acquisition of Bio Pure, which makes clamps and connectors for the biopharmaceutical industry.

The group recorded flat sales and lower profits in China as the nation’s once-booming industrial sector slowed. But that looks set to reverse, as its order book in the country increased by a fifth. Nevertheless, investors can expect currency to depress full-year sales by about 7 per cent if current exchange rates prevail.

Broker Liberum Capital expects pre-tax profits of £153m, giving EPS of 143p.