Spirax-Sarco Engineering trading 'in line with expectations' investors told
Cheltenham-based global steam engineering specialist Spirax-Sarco says trading is in line with expectations, following what it described as a challenging year.
The firm reported high demand in some areas – global Industrial Production growth up 2.8 per cent, IP up 0.6 per cent, and full year 2023 IP now forecasted to be 1.3 per cent.
Organic sales growth in the four months to the end of April was in line with driven by growth significantly above IP in Steam Specialties and Electric Thermal Solutions (ETS).
Watson-Marlow sales were lower compared to the same period of 2022, as anticipated, reflecting the ongoing normalisation of COVID-19 related demand from Biotechnology & Pharmaceutical customers.
Meanwhile, order books in Steam Specialties and ETS remain at historically high levels driven by strong demand.
The company said that as the underlying demand for cell and gene therapy medications remains strong, it continues to anticipate an increase in order intake in the second half of the year once Biotechnology & Pharmaceutical customers have worked through their excess stocks.
But the Group adjusted operating profit margin in the first four months of the year was lower than the same period in 2022, driven by Watson-Marlow's lower margin due to the operational gearing effect of reduced sales.
Consistent with the strong sales performance in Steam Specialties and ETS, both Businesses delivered increased margins, while Watson-Marlow's margin was lower due to the operational gearing effect of reduced sales.
Excluding leases, net debt at 30th April 2023 was £710 million, up from £690 million at 31st December 2022.
"We continue to anticipate double-digit sales growth for the Group in 2023, representing mid-single-digit sales growth over 2022 pro-forma sales," the firm told investors.
"We also continue to anticipate both sales and adjusted operating profit to be more weighted to the second half of the year than in previous years, with a small progression in the Group's full year adjusted operating profit margin."
