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Gloucestershire Business News

Spirax-Sarco trading ‘in line with expectations’

Cheltenham-based global steam engineering specialist, Spirax-Sarco Engineering has released its trading figures today (May 10).

The figures show high demand in some areas of the business, a small increase in net debt and a fall in production.

Following global Industrial Production growth (IP) of 2.8% in 2022, IP was 0.6% in the first quarter of 2023, against a backdrop of continuing uncertainty over the global macroeconomic outlook.

The company said IP is expected to strengthen modestly by the end of the year, with full year 2023 IP now forecasted to be 1.3%.

Organic sales growth in the four months to the end of April was in line with expectations, driven by growth significantly above IP in Steam Specialties and Electric Thermal Solutions (ETS).

Order books in Steam Specialties and ETS remain at historically high levels, driven by strong demand.

As the underlying demand for cell and gene therapy medications remains strong, Spriax-Sarco continues to anticipate an increase in order intake in the second half of the year, once biotechnology and pharmaceutical customers have worked through their excess stocks.

As expected, adjusted operating profit margin in the first four months of the year was lower than the same period in 2022. Consistent with the strong sales performance in Steam Specialties and ETS, both businesses delivered increased margins, while subsidiary company, Watson-Marlow's, margin was lower due to the operational gearing effect of reduced sales.

Spirax-Sarco anticipates Watson-Marlow's adjusted operating profit margin and the group's overall margin, will recover in the second half of the year, driven by expected higher demand and the full benefit from actions taken in the first quarter to right-size Watson-Marlow capacity and overhead support costs.

If current exchange rates continue for the remainder of the year, the company anticipates a modest adverse effect on full year sales and profit, compared with 2022.

Excluding leases, net debt on April 30 as £710 million, up from £690 million on December 31.

In a statement on its website, the company said: "We continue to anticipate double-digit sales growth for the group in 2023, representing mid-single-digit sales growth over 2022 pro-forma sales. We also continue to anticipate both sales and adjusted operating profit to be more weighted to the second half of the year than in previous years, with a small progression in the group's full year adjusted operating profit margin."

Despite having offices in 62 countries, Spirax-Sarco does a lot for the community in Cheltenham. It has donated a large number of defibrillators to the Public Hearts campaign in the town and is a sponsor of this year's Cheltenham Pride celebration.

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