Spirax-Sarco: Subdued trading but improvement expected next year
By David Wood | 16th November 2023
Spirax-Sarco Engineering plc has seen sales growth slow over the last few months amid a "subdued trading environment".
This has left revenue so far in 2023 down on a year before, but the Cheltenham-based thermal energy management and pumping company expects to resume revenue growth next year.
Spirax-Sarco said that in the four months ending October 31, sales growth across all three of its businesses failed to meet expectations.
For the first ten months of 2023, group revenue was marginally below levels for the same period in 2022. Spirax-Sarco said currency effects hurt sales and adjusted operating profit.
The company said organic sales growth in Steam Specialities was "well below the very strong 15%" achieved in the first half of 2023.
However, Spirax-Sarco said the division continued to grow, despite the weakening macro-economic environment.
Demand growth in Electric Thermal Solutions "remained strong" and the order book increased. However, weak demand continued from industrial equipment customers in the Semicon WFE, and sales growth failed to meet demand due to ongoing operational improvements.
The weakening macro-economic environment also hurt demand from Process Industries sector customers. Meanwhile in the Watson-Marlow business, Spirax-Sarco said demand from Biopharm customers remained broadly in line with demand in the first half year.
Spirax-Sarco anticipates an adverse impact of approximately 1.5% on full-year sales and profit if current exchange rates prevail for the rest of 2023.
Excluding this, Spirax-Sarco expects full-year sales to be between 1% and 2% lower than the £1.73 billion delivered in 2022. Additionally, it expects Biopharm and Semicon WFE sector demand to recover next year.
The trading update concluded: "While it is too early to provide guidance for 2024, we do anticipate a return to revenue growth and improvement in adjusted operating margin in the coming year."
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