These impressive figures helped cement Spirax-Sarco's reputation as one of the sector's better dividend plays. Shares in the specialist engineer hardly moved on the news - but only because management had already given away the key facts with July's update.
Those facts included 8 per cent growth in constant currency sales and a 19.3 per cent margin; up from 15 per cent last year. Together, these produced a 40 per cent year-on-year jump in adjusted pre-tax profit - the even heftier reported figure reflects a non-cash revaluation gain after the group bought out its Mexican joint-venture partner.
Spirax-Sarco is the leader in two relatively fragmented niche markets - industrial steam systems and peristaltic pumps. Sales mainly depend on small-scale maintenance and replacement work rather than major capital improvement projects, and that has protected the company from the worst of the recession in 2009 and has helped fuel a relatively speedy rebound since. But
Even so, recovery has been patchy, with Asia and the Americas booming while much of Europe remained flat. The second half, though, is likely to be tougher as industrial growth has started to slow and raw material costs are rising. A stronger pound is also bad news.
Investec Securities expects adjusted full-year pre-tax profits of £114m and EPS of 103p (£90m and 82p in 2009).
SPIRAX-SARCO ENGINEERING (SPX) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,556p | MARKET VALUE: | £1.2bn | |
| TOUCH: | 1,555-1,560p | 12-MONTH HIGH: | 1,617p | LOW: 947p |
| DIVIDEND YIELD: | 2.5% | PE RATIO: | 15 | |
| NET ASSET VALUE: | 419p* | NET CASH: | £20m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 252 | 30.2 | 27.2 | 10.5 |
| 2010 | 277 | 61.3 | 58.5 | 13.0 |
| % change | +10 | +103 | +115 | +24 |
Ex-div: 13 Oct Payment: 12 Nov *Includes intangible assets of £88.2m, or 115p a share | ||||
