Management can only do so much in the face of a deteriorating macro outlook, so Spirax-Sarco’s (SPX) impressive full-year performance was tempered by a caveat that industrial production growth had slowed throughout the year and was likely to drop further in 2019.
Excluding M&A effects, the valves and pumps fabricator grew sales by 7 per cent at constant currencies, while boosting the adjusted operating margin by 120 basis points. The top line benefited from improved order intake across all group segments, except for oil and gas, which saw similar levels to 2017. Watson-Marlow Fluid Technology delivered an 11 per cent increase in adjusted operating profits, while the steam specialities business was up 12 per cent.
New product development “continued apace” and international certifications were secured for several recently developed products. Sales in India and South Korea were on a tear through 2018, while China exhibited double-digit growth, and a new distribution centre in Singapore shortened lead times. Investments in the US's east and west coast direct sales initiatives are already fuelling growth, complementing blossoming activity in the group’s Latin American markets.
| SPIRAX-SARCO ENGINEERING (SPX) | ||||
| ORD PRICE: | 6,735p | MARKET VALUE: | £ 4.96bn | |
| TOUCH: | 6,735-6,745p | 12-MONTH HIGH: | 7,425p | LOW: 5,500p |
| DIVIDEND YIELD: | 1.5% | PE RATIO: | 22 | |
| NET ASSET VALUE: | 1,040p* | NET DEBT: | 31% | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2014 | 0.68 | 145 | 133 | 64.5 |
| 2015 | 0.67 | 140 | 130 | 69.0 |
| 2016 | 0.76 | 171 | 165 | 76.0 |
| 2017 | 1.00 | 193 | 214 | 87.5 |
| 2018 | 1.15 | 289 | 303 | 100 |
| % change | +15 | +50 | +41 | +14 |
| Ex-div: | 25 Apr | |||
| Payment: | 24 May | |||
| *Includes intangible assets of £645m, or 877p a share | ||||
