7th Aug 2019 08:54
(Alliance News) - Spirax-Sarco Engineering PLC on Wednesday reported a slight increase in first-half profit and also raised its dividend payout.
Spirax added full-year expectations remain unchanged, despite weakening global industrial production growth forecasts for the second half of 2019.
Shares in the company were down 7.1% in London at 7,995.00 pence each early Wednesday.
Spirax, which manufactures valves and pumps, recorded pretax profit of GBP108.1 million for the six months to June 30, up 1.2% from the year-ago period, on revenue of GBP591.2 million, up 8.0% year-on-year.
Profit margins fell to 19.1% from 20.4% due to the disposal of the highly profitable HygroMatik business, a negative exchange impact, and the lower operating profit in the Chromalox division, Spirax said.
First-half adjusted operating profit increased 3% year-on-year to GBP129.2 million, negatively impacted by GBP1.1 million from acquisitions and disposals, and a GBP800,000 exchange headwind.
Spirax declared an interim dividend of 32.0p per share, up 10% from 29.0p a year ago.
"We are pleased to report strong organic sales growth of 8% in the first half of the year and organic operating profit growth of 4%, with all three businesses delivering organic sales growth ahead of industrial production," said Chief Executive Nicholas Anderson.
"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," Anderson added.
The Steam Specialties division, which manufactures pressure pumps, posted a 9% rise in first-half adjusted operating profit to GBP81.5 million. Chromalox electric heating business had adjusted operating profit of GBP8.1 million, down 24% on the prior-year period.
The company's Watson-Marlow peristaltic pumps business posted adjusted operating profit of GBP45.0 million, up 14% year-on-year.
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