10th May 2016 09:54
LONDON (Alliance News) - Spirax-Sarco Engineering PLC on Tuesday said trading in the first four months of 2016 broadly matched trends seen in 2015, but said its revenue visibility remains low amid a still-sluggish industrial market.
Global industrial production growth has remained at a very low level in the first months of 2016, the company said. Production from developed economies declined but was matched by rising production from emerging markets.
Spirax-Sarco, which makes steam management systems and peristaltic pumps, said its Europe, Middle East and Africa markets have remained stable overall, with industrial production growing less than 1.0% but showing a modest pick up in some markets.
Industrial production declined in North America and remained firmly negative in Latin America in the first four months, while growth improved slightly in Asia-Pacific amid a modest recovery in China.
Spirax-Sarco said organic sales, stripping out acquisitions effects and in constant currencies, were in line with trends seen over 2015 in the first four months of 2016. Operating profit for the first four months was higher year-on-year in constant currencies, benefiting from stable material input costs.
Profit also benefited in the first four months from the job cuts made in the UK steam specialities business in 2015 not repeating.
The growth, the company said, followed a similar pattern. Watson-Marlow Fluid Technology Group continued to make progress in the first four months, the group said, while sales for its steam specialities business were broadly flat. Within steam specialities, the group saw a lower level of large projects, offset by increased sales from self-generated smaller projects and an improved repair and maintenance business.
Regionally, Europe, Middle East and Asia organic sales declined modestly in the first four months compared to a relatively strong start to 2015, Spirax-Sarco said, while Asia Pacific sales also were slightly lower, albeit offset by small gains in China and Korea. Americas sales were slightly ahead, with a good performance in Latin America which offset a small decline in North America.
Spirax-Sarco said industrial production growth slowed in 2015 but appears to have stabilised in early 2016, though the outlook for the market remains uncertain and the company said it remains "vigilant", particularly by keeping a tight control on costs.
Spirax-Sarco said it anticipates making progress in 2016, provided no material deterioration emerges in market conditions. It does, however, still have limited visibility on future revenue and "short" order books, it said. It expects that to be ameliorated by its geographic and sector diversification.
"Our strategy is focused on self-generated growth to reduce reliance on the market and we are investing resources into our strategic priorities to increase the effectiveness of our highly trained direct sales force, broaden the group's geographic presence, leverage new product development and optimise our supply chain, whilst developing a more sector-aligned organisation," the company said.
Spirax-Sarco will publish interim results, for the six months to the end of June, on August 9.
Shares in the company were up 0.4% to 3,457.00 pence.
By Sam Unsted; [email protected]; @SamUAtAlliance
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