TIDMSPX
RNS Number : 5246E
Spirax-Sarco Engineering PLC
09 May 2017
News Release
Tuesday 9(th) May 2017
AGM Statement - TRADING UPDATE
Consistent performance, overall expectations unchanged
Spirax-Sarco Engineering plc, the world leader in the control
and efficient use of steam and in peristaltic pumping and
associated fluid path technologies, issues the following trading
update in respect of the period ended 30(th) April 2017.
Trading
As anticipated, organic* sales growth for the Group in the first
four months of the year was above that of the same period in the
prior year due to the more benign industrial production background
and an uncharacteristically weak first four months of 2016. We
believe that the phasing of sales in the current year will be more
closely aligned to historic patterns than seen in 2016 when we
experienced an unusually weak first quarter and an unusually strong
second quarter.
In response to the improving economic background and against a
weak comparison for the same period in 2016, all geographic
segments of the Steam Specialties business are showing organic
growth with a particularly good performance from Asia Pacific,
driven by China and Korea, which benefited from the shipment of
large projects secured in 2016. In EMEA, sales grew in the majority
of our territories with the region as a whole showing growth above
last year's levels. As expected, the high levels of organic growth
seen in the Americas during 2016 have slowed, as inflation in
Argentina has reduced and the country's currency stabilised. In the
USA sales were flat although we have seen the beginnings of a
recovery in sales to our distributor network.
The Watson-Marlow Fluid Technology Group continues to deliver
strong organic growth although, as expected, not at the levels seen
in 2016. The Aflex acquisition continues to perform well, in line
with our expectations.
Following the UK's referendum to exit the European Union and the
subsequent devaluation of sterling in the middle of last year we
have continued to experience a significant currency tailwind.
However, since the announcement of our preliminary results in
March, sterling has generally strengthened against the basket of
currencies we trade in. If recent foreign exchange rates continue
for the rest of the year we would expect to see a total uplift in
sales and profits of 5% and 8% respectively for 2017 compared to
2016, with the majority of the benefit being seen in the first half
of the year.
On an organic, constant currency basis, Group operating profit
is ahead of the comparable four-month period in 2016. We will
continue to prioritise investments for growth over further margin
expansion as the year progresses.
Financial position
Our business remains highly cash generative and we maintain a
strong balance sheet, with a net cash balance of GBP60 million at
30(th) April 2017, prior to the acquisition of Gestra on 3(rd) May
2017. There has been no material change in the financial position
of the Group during the period.
Acquisition
On 3(rd) May the Group announced the successful completion of
the acquisition of Gestra for a cash-free, debt-free consideration
of EUR186 million (GBP160 million).
Gestra, headquartered in Bremen, Germany, is a technology leader
in advanced industrial boiler control systems and specialises in
the design and production of valves and control systems for steam
and fluid process control. The business is highly complementary to
the Spirax Sarco Steam Specialties business and will enhance and
accelerate the implementation of Spirax Sarco's strategy for
growth, as a result of its well-developed capabilities in a wide
range of industries and applications.
We have already started working with our new colleagues to
implement our growth plans.
Outlook
Increasing Industrial Production growth rates have, as expected,
provided an improving operating environment in the first four
months of the year, positively impacting the Group's results.
Organic growth rates in the Steam Specialties business have been
accentuated by the slow start seen in 2016 and we would expect
these to moderate by the half year, due to last year's strong
second quarter. The Watson-Marlow business continues to show good
growth but, as anticipated, at a reduced rate to the prior year. We
are pleased with the Gestra acquisition that along with the
acquisition of Aflex in late 2016 is expected to deliver high
single-digit inorganic growth in the year.
We have good diversification across market sectors and
geographic regions and remain focused on our strategies for growth.
While, as normal, we continue to have limited visibility, with
short order books, the Group's fundamental strengths stand us in
good stead to continue to deliver growth that outperforms our
markets. Our overall expectations of organic growth for the
full-year are unchanged and provided there is no material
deterioration in trading conditions the Board has confidence that
the Group will make further progress in 2017.
Spirax-Sarco Engineering plc expects to publish its 2017
half-year results on Wednesday 9(th) August 2017.
Enquiries:
Nicholas Anderson, Chief Executive
Kevin Boyd, Group Finance Director
Tel: 01242 535234
* References to organic changes are excluding acquisitions and
disposals, and are expressed at constant currency.
References to profit are to adjusted profit that excludes the
amortisation and impairment of acquisition-related intangible
assets and acquisition and disposal costs, together with the tax
effects of these items.
About Spirax Sarco
Spirax-Sarco Engineering plc is the world leader in each of its
two businesses, Spirax Sarco for steam specialties and
Watson-Marlow Fluid Technology Group for niche peristaltic pumps
and associated fluid path technologies. The Steam Specialties
business provides a broad range of fluid control products,
engineered packages, site services and systems expertise for a
diverse range of industrial and institutional customers. The
Company helps its end users to improve production efficiency,
reduce energy costs, water usage and emissions, improve product
quality and enhance the safety of their operations. Watson-Marlow
Fluid Technology Group offers the ideal solution for a wide variety
of demanding fluid path applications with highly accurate,
controllable and virtually maintenance free pumps and associated
technologies. The Group is headquartered in Cheltenham, England,
has strategically located manufacturing plants around the world and
employs over 5,900 people, of whom more than 1,400 are direct sales
and service engineers. Its shares have been listed on the London
Stock Exchange since 1959 (symbol: SPX).
Further information can be found at
www.spiraxsarcoengineering.com
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