11th Mar 2020 08:13
(Alliance News) - Spirax-Sarco Engineering PLC on Wednesday reported a profit fall due to one-off costs but upped its dividend, though it warned on its 2020 performance amid unfavourable currency exchange rates and the coronavirus spread.
Spirax - which manufactures valves and pumps - posted an 18% pretax profit decline in 2019 to GBP236.8 million from GBP288.8 million in 2018. Revenue rose 7.7% to GBP1.24 billion from GBP1.15 billion.
Depreciation, amortisation and impairment costs rose by almost a third to GBP76.8 million. Also weighing on profit was a GBP4.1 million in fair value adjustment related to Spirax's acquisition of Thermocoax, which it completed back in May for GBP135 million.
Adjusted pretax profit rose 7.8% to GBP274.5 million from GBP254.6 million and organic revenue rose by 6%.
Chief Executive Nicholas Anderson said: "Both the Steam Specialties and Watson-Marlow businesses benefited from the successful implementation of our strategy, achieving strong organic sales and profit growth, while margins in Chromalox increased in the second half as operational efficiency initiatives began to deliver results."
Steam Specialties, the largest revenue contributor, produces steam traps and power pumps. Watson-Marlow manufactures tubing for fluid transfer while Chromalox is part of the Electric Thermal Solutions business, which creates temperature management systems.
Spirax upped its dividend by 10% to 110.0 pence per share from 100.0p.
Anderson added: "Political and economic uncertainty, as well as Covid-19, continue to dampen global industrial production growth forecasts, although we currently assume that conditions will begin to improve during the second half of the year. We remain cautious currently on the economic outlook, but confident in our ability to self-generate growth through the implementation of our strategy and to outperform our markets."
Looking ahead, Spirax said that while currency had "little impact" on its 2019 numbers, the outlook for 2020 is more uncertain.
"As Brexit trade negotiations, Covid-19 and US/China tariff negotiations continue to cause volatility. If current exchange rates were to prevail for the remainder of the year there would be a negative 2% impact on sales from translation and a negative 3% impact on profit from translation and transaction, compared with the full year 2019," Spirax added.
Chief Financial Officer Kevin Boyd will retire before the end of 2020, the company said "following an orderly handover of his duties to a successor".
Spirax said it has kicked off a search to find a "suitable external candidate" to replace Boyd.
The FTSE 100 stock was 0.3% lower at 8,285.00 pence each in London in early trade on Monday.
By Eric Cunha; [email protected]
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