Spirax started to feel the effects of the global recession late in 2008 and demand for its pumps and heat exchange technology remained depressed through much of last year, but helped by a strong currency tailwind the company reported record sales and underlying operating profits.
There are now signs of recovery, especially in Asia, and there has been an improvement in Europe and the Americas, which has carried into 2010 and in the past two months group sales are up 2 per cent in constant currency terms. However, Spirax warns that the upturn remains fragile and its European markets, the largest, remain challenging apart from Russia, where the group is seeing good growth.
Meanwhile, Spirax has been cutting costs with around £4m savings expected to come through this year. UK production has been rationalised and the new manufacturing plant in China is due to come on stream in the second quarter, recent bolt-on acquisitions have bedded down well and Spirax has a pipeline of new products. High energy prices and the need to cut emissions will boost demand from users of steam power and pumps and in Watson-Marlow, Spirax has a presence in the high growth area of peristaltic pumps.
BoA Merrill Lynch expects adjusted 2010 pre-tax profits will rise from £90m to £102m, giving EPS of 94.3p (2009: 82p).
SPIRAX SARCO (SPX) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,324p | MARKET VALUE: | £1.01bn | |
| TOUCH: | 1321 - 1327p | 12-MONTH HIGH: | 1,324p | LOW: 758p |
| DIVIDEND YIELD: | 2.7% | PE RATIO: | 19 | |
| NET ASSET VALUE: | 402p* | NET CASH: | £8.0m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2005 | 349 | 57.0 | 50.0 | 23.8 |
| 2006 | 384 | 65.3 | 57.7 | 26.5 |
| 2007 | 417 | 72.2 | 64.7 | 29.9 |
| 2008 | 502 | 85.2 | 78.0 | 33.3 |
| 2009 | 519 | 76.4 | 69.6 | 36.1 |
| % change | +3 | -10 | -11 | +8 |
Ex-div:14 Apr Payment:21 May *Includes intangible assets of £73.4m, or 96p per share | ||||
