Spirax-Sarco delivered double-digit profit growth in every region last year, driven by demand for its energy-saving steam equipment and pumps in emerging markets. There's clearly potential to keep expanding there, but growth in core European markets like France, the UK and even Germany has slowed and there's been no improvement so far in 2012.
Almost all of Spirax's sales growth last year was organic and with operating margins rising 40 basis points to 20.6 per cent - the tenth consecutive year of improvement - this in turn drove underlying operating profit up 12 per cent to a record £134m, led by the high-margin Watson-Marlow pumps business and Asia Pacific area.
Emerging markets, where Spirax made 47 per cent of its profits in 2011, take much of the credit. In fact, Russia is now among the five largest businesses in Europe following an "outstanding" year, while China broke records. And, given that many of Spirax's customers are in more defensive industries like food, textiles and pharmaceuticals, it stands to keep growing. Beijing is also keen to stimulate domestic consumption and its latest five-year plan promotes energy-saving initiatives.
Broker Numis expects 2012 adjusted pre-tax profit of £149m and adjusted EPS of 133.5p (£137.2m and 124.8p in 2011).
SPIRAX-SARCO ENGINEERING (SPX) | ||||
|---|---|---|---|---|
| ORD PRICE: | 2,141p | MARKET VALUE: | £1.66bn | |
| TOUCH: | 2,141-2,145p | 12-MONTH HIGH: | 2,143p | LOW: 1,593p |
| DIVIDEND YIELD: | 2.3% | PE RATIO: | 18 | |
| NET ASSET VALUE | 514p* | NET CASH: | £12.3m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2007 | 417 | 72 | 65 | 29.9 |
| 2008 | 502 | 85 | 78 | 33.3 |
| 2009 | 519 | 76 | 70 | 36.1 |
| 2010 | 590 | 124 | 113 | 43.0** |
| 2011 | 650 | 132 | 120 | 49.0 |
| % change | +10 | +7 | +7 | +14 |
Ex-div: 18 Apr Payment: 18 May *Includes intangible assets of £85m, or 110p a share **Excludes a 25p special dividend | ||||
