Shares in Spirax-Sarco slumped 6 per cent after the steam and pump engineer missed expectations in the first half due to the economic downturn in Europe and Latin America. Despite a slight rise in sales, the group reported falling margins, which led to a 6 per cent fall in adjusted pre-tax profits to £59.3m. However, even though management is confident that a £5m cost-saving plan and strong July sales can help drive a second-half recovery, broker Peel Hunt expects to cut full-year adjusted pre-tax profit forecasts by 8 per cent to £135m, giving EPS of 122p (down from £137m and 123p in 2011).
The worst affected regions were Europe, Middle East and Africa (Emea), where revenues fell 6 per cent to £115m. Manufacturing operations in the UK and France generated significantly lower profits due to destocking and lower demand which, combined with a weakening euro, meant operating profit fell 21 per cent to £16.5m. The Americas business was also hit by unfavourable currency headwinds as well as weakening demand in Brazil. Only part of the £5.3m profit shortfall from Emea and Americas was made up by the Asia Pacific region where Spirax is still enjoying double-digit sales growth. This is now the most profitable operation, reporting profits up 16 per cent to £18m.
SPIRAX-SARCO ENGINEERING (SPX) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,948p | MARKET VALUE: | £1.5bn | |
| TOUCH: | 1,946-1,949p | 12-MONTH HIGH: | 2,353p | LOW: 1,628p |
| DIVIDEND YIELD: | 2.6% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 519p* | NET CASH: | £9.2m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 308 | 60.8 | 54.1 | 14.8 |
| 2012 | 314 | 51.7 | 46.3 | 16.0 |
| % change | +2 | -15 | -14 | +8 |
Ex-div: 10 Oct Payment: 9 Nov *Includes intangible assets of £85m, or 109p a share | ||||
