A typically candid appraisal at the half-year mark from engineer Spirax-Sarco (SPX) played well with analysts and investors alike, resulting in a bump for the share price on the day these numbers were released.
The steam and fluid technology specialist admitted that a relatively weak performance during the second quarter of 2015 and operational gearing effects flattered comparable metrics this time around. The group also carried over some large orders from last year, so lower organic growth rates are expected in the second half of this year. Nevertheless, the group still achieved an underlying organic margin increase of 210 basis points, with adjusted operating profit up 16 per cent to £77.5m - it's a solid out-turn anyway you look at it.
It's clear that the group is intent on managing expectations for the remainder of this year. Spirax-Sarco's business mix means that it is highly attuned to global industrial activity, and management highlighted a progressive slowdown in both developed and emerging markets over the past year.
Prior to these figures, JPMorgan Cazenove anticipated revenue and EPS of £710m and 158p, respectively, for the December year-end, rising to £734m and 165p in 2017 (from £667m and 143p in 2015).
| SPIRAX-SARCO ENGINEERING (SPX) | ||||
|---|---|---|---|---|
| ORD PRICE: | 4,275p | MARKET VALUE: | £3.14bn | |
| TOUCH: | 4,273-4,277p | 12-MONTH HIGH: | 4,283p | LOW: 2,664p |
| DIVIDEND YIELD: | 1.7% | PE RATIO: | 29 | |
| NET ASSET VALUE: | 585p* | NET CASH: | £20.6m | |
| Half-yearto 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 320 | 57.3 | 52.2 | 20.8 |
| 2016 | 344 | 73.4 | 70.2 | 22.5 |
| % change | +8 | +28 | +34 | +8 |
Ex-div: 13 Oct Payment: 11 Nov *Includes intangible assets of £117m, or 159p a share | ||||
