8th Aug 2024 15:43
(Alliance News) - Spirax Group PLC on Thursday said its first-half results were below expectations as it grapples with tough market conditions.
The Cheltenham, England-based thermal energy and fluid technology firm said pretax profit rose 9.5% to GBP124.8 million in the first half that ended June 30 from GBP114.0 million in the previous year.
Revenue fell 2.8% to GBP827.0 million from GBP850.8 million, while operating costs declined 5.4% to GBP679.8 million from GBP718.6 million.
Spirax raised its interim dividend by 3.3% to 47.5 pence per share from 46.0p.
Chief Executive Officer Nimesh Patel: "Against the backdrop of a weak macroeconomic environment in some of our key markets and a strong currency headwind, first half results were slightly below our expectations.
"We are delivering early operational improvements and will increase the pace at which we address these within our group. We are also focusing our investments to capitalise on global trends and high growth markets, which will accelerate our long term organic growth."
Steam Thermal Solutions revenue fell 6.3% to GBP430.8 million, Electric Thermal Solutions revenue rose 2.7% to GBP197.7 million, and Watson-Marlow fluid solutions revenue was unchanged at GBP198.5 million.
Analysts at Stifel commented: "As we had suspected, Watson Marlow is showing some gentle signs of improvement, but weaker macro trends, especially in China, are catching up with the core Steam business."
Spirax noted that industrial production remained weak throughout the first six months of the year, contracting in Germany, France, and the US. These regions accounted for 40% of Spirax sales last year.
"We remain cautious on the scale of the forecast improvement in IP for the second half. Therefore, we have taken a more conservative view in our planning and expectations for the second half," Spirax said.
For the full year, Spirax expects to deliver mid-single-digit organic revenue growth and an adjusted operating profit margin broadly in line with 21% reported in 2023.
Spirax shares fell 6.8% to 7,955.00 pence each in London on Thursday afternoon. It is down 26% over the past 12 months.
By Eric Cunha, Alliance News news editor
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