TIDMSPX
RNS Number : 5915S
Spirax-Sarco Engineering PLC
17 November 2021
News Release
Wednesday 17(th) November 2021
TRADING UPDATE
Continued strong growth, guidance unchanged
Thermal energy management and niche pumping specialist,
Spirax--Sarco Engineering plc, issues the following trading update
in respect of the four months ended 31(st) October 2021.
Economic environment
In the third quarter, global Industrial Production (IP)
recovered from COVID-19 pandemic impacted levels in 2020, growing
4.9%. However, disruptions in the global supply chain leading to
material shortages and rising costs resulted in a slight
quarter-on-quarter sequential contraction of global IP. Full-year
forecasts for 2021 have been revised down to 7.4%, compared to 8.6%
forecasted at the time of our Half Year Results, while full-year
2022 forecasts have also been reduced to 4.3% from 5.0%.
Trading
We continue to experience very strong demand across the Group,
with order books in all three businesses expanding in the four
months to the end of October above our expectations at the time of
the Half Year Results. Growth in orders was highest in
Watson-Marlow, driven by continued COVID-19 vaccine related demand
from its customers in the Pharmaceutical & Biotechnology
sector. In Steam Specialties, demand growth was well ahead of IP
growth and orders received year-to-date are above the comparative
period in 2019. Demand for Electric Thermal Solutions has grown at
an even faster rate than Steam Specialties, after adjusting for the
US Navy order secured in 2020, the largest single order in our
Group's history.
Although we have a diversified and resilient supply chain, we
are not immune to current disruptions being experienced globally
and across all sectors. While all three businesses were somewhat
impacted by shipment delays, the effects have been greater within
Watson-Marlow and Electric Thermal Solutions. Within Electric
Thermal Solutions we also experienced delays in the delivery of
operational performance improvements resulting in lower sales
growth than anticipated. The adverse effect of rising material and
freight costs continues to be broadly offset by internal
efficiencies and price management practices.
Currency effects had an adverse impact on sales and operating
profit, compared to the same period of 2020, as sterling
strengthened against our basket of trade currencies. If current
exchange rates were to prevail for the remainder of the year, we
anticipate close to 4% adverse impact on full year sales and
profit, compared with the full year 2020.
Financial position
Our business remains highly cash generative and we maintain a
strong balance sheet. Excluding leases, our net borrowings at
31(st) October 2021 were GBP131 million, down from GBP193 million
at 30(th) June 2021. The interim dividend of 38.5p per share was
paid on 12(th) November 2021 with a cash impact of GBP28
million.
Outlook
We are maintaining our overall guidance despite the supply chain
challenges in the second half of the year and expect record levels
of revenue, profit and operating margin for the full year 2021.
As anticipated, forecasted global IP growth for 2021 has
continued to be revised downward since our Half Year Results,
partly reflecting the impact of disruption to the global supply
chain, with further risk of a slowing IP growth rate in the fourth
quarter and into next year. Despite these challenges, we expect to
end the year with a record order book across all three
businesses.
For 2022, we expect growth in both sales and profit, underpinned
by continuing strong demand and our higher-than-normal order book.
The Group operating margin is expected to be lower due to the full
year impact of revenue investments in 2021, as well as further
investment planned in 2022 to support our future growth and
operating margins.
Spirax-Sarco Engineering plc expects to publish its preliminary
2021 results on 10(th) March 2022.
Enquiries:
Nimesh Patel, Chief Financial Officer
Shaun Laubscher, Head of Investor Relations
Tel: 01242 535234
Note: Operating profit refers to adjusted operating profit and
organic performance measures are expressed at constant currency,
excluding contributions from acquisitions and disposals, as
explained in Note 2 to the Consolidated Financial Statements for
the period ended 31(st) December 2020.
About Spirax--Sarco Engineering plc
Spirax--Sarco Engineering plc is a thermal energy management and
niche pumping specialist. It comprises three world--leading
businesses: Steam Specialties, for the control and management of
steam; Electric Thermal Solutions, for advanced electrical process
heating and temperature management solutions; and Watson-Marlow,
for peristaltic pumping and associated fluid path technologies. The
Steam Specialties and Electric Thermal Solutions businesses provide
a broad range of fluid control and electrical process heating
products, engineered packages, site services and systems expertise
for a diverse range of industrial and institutional customers. Both
businesses help their end users to improve production efficiency,
meet their environmental sustainability targets, improve product
quality and enhance the safety of their operations. Watson--Marlow
Fluid Technology Group provides solutions 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, UK, has strategically
located manufacturing plants around the world and employs over
8,400 people, of whom close to 2,000 are direct sales and service
engineers. Its shares have been listed on the London Stock Exchange
since 1959 (symbol: SPX) and it is a constituent of the FTSE 100
and the FTSE4Good indices.
Further information can be found at
www.spiraxsarcoengineering.com
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