Spirax Sarco reports strong first half growth

Spirax Sarco

Cheltenham-based FTSE 100 company Spirax Sarco, the thermal energy management and niche pumping business which employs more than 1,000 people in Cheltenham and Gloucester, has reported strong first half organic growth with revenues up eight per cent to £591.2 million, and operating profit margin of 21.9 per cent, which is in line with expectations, the company says.

Steam Specialties and Watson-Marlow pumps, which together represent 86 per cent of Group Revenue, achieved strong organic sales and profit growth, while Chromalox – bought by the company two years ago, continued its organic sales growth, though profitability was down.

In May the company bought French electro thermal specialist Thermocoax for £135 million.

Nicholas Anderson, Group Chief Executive, said: “We are pleased to report strong organic sales growth of eight per cent in the first half of the year and organic operating profit growth of four per cent, with all three businesses delivering organic sales growth ahead of industrial production.

“Both the Steam Specialties and Watson-Marlow businesses achieved strong organic sales growth and margin progression, reflecting the successful implementation of our strategy and its focus on self-generated growth. Chromalox also grew sales organically against a very tough comparison.

“The only disappointment of this period was a profitability deterioration in Chromalox so we have intensified work to improve its operational performance.  Our original expectations for this business remain unchanged.  While the Group’s strong first half organic sales growth was ahead of our expectations, industrial production growth forecasts for the second half of the year have weakened below earlier estimates.  As a result, our overall full year expectations remain unchanged.”

The company said “Our expectations remain for organic sales growth ahead of global industrial production growth as we focus on maintaining a good level of base business and growth in small project sales, while delivering a number of large projects carried over from the previous year.  We anticipate that a combination of improved operational efficiencies, increased operational gearing from seasonally higher second half shipments, benefits from the restructuring in the first half, improved pricing discipline and the acquisition of higher-margin Thermocoax, will result in the adjusted operating profit margin for the full year being similar to that reported in 2018.

“Although market conditions have softened during the first six months of the year, we have a healthy order book and remain confident in our ability to improve Chromalox’s performance and deliver sustainable profitable growth, therefore our longer-term expectations for this business remain unchanged.”

Spirax‐Sarco Engineering plc comprises three businesses: Steam Specialties, for the control and management of steam; Chromalox, for electrical thermal energy solutions; and Watson-Marlow, for peristaltic pumping and associated fluid path technologies.

The Group operates manufacturing plants around the world and employs more than 7,900 people globally.