Improved Asia-Pacific trading puts Spirax-Sarco in line with full-year targets

Industrial engineer Spirax-Sarco stayed on track to hit full-year expectations as sales in the four months leading to 31 October were boosted by growth in Asia Pacific, though offered limited visibility for 2018 due to the usual short-term nature of its order book.

The FTSE 250 group reported that organic sales had "increased modestly" across the group with its EMEA segment benefitting from a stronger order book at the beginning of the second half, with underlying growth in the Asia Pacific region continuing its strong performance, particularly in China and Korea, the group's two largest territories in the region.

The group also noted that Watson-Marlow Fluid Technology, and its recently acquired interests in Hiter, Afex, Gestra and Chromalox, had all progressed well and had performed "in line with expectations", with the net effect of the newly added businesses anticipated to increase Spirax-Sarco's e full-year sales somewhere in the realm of 19%.

Spirax-Sarco reported simply that operating profits were "ahead" of the same 10-month period last year at constant currencies, on an organic basis and including acquisitions.

With currency effects of the Brexit vote in June last year having moderated, if spot rates as of 31 October prevailed through to the end of the calendar year, sales would increase approximately 5%, boosting profits up a further 8% in the process.

Spirax-Sarco maintained a strong balance sheet throughout the period after financing several of its recent acquisitions from existing cash resources and new debt facilities, leaving net borrowings at £379m at the end of October.

Looking forward, Spirax-Sarco said, "Industrial production growth rates are forecast to remain positive for the remainder of the year in both developed and emerging markets although predictions for 2018 are less clear, particularly with regard to China."

"Whilst, as always, we have limited visibility due to the short-term nature of our order book, we have good diversification across market sectors and geographic regions and remain focused on our strategies for growth, which, together with the group's fundamental strengths, stand us in good stead," the firm added.

The firm, which expected to publish its preliminary results for 2017 on 15 March, paid an interim dividend of 25.5p per share on 10 November.

Spirax shares gained almost 1% to 5,847.66p on Tuesday.