Spirax-Sarco predicts strong growth as profit surges

Spirax-Sarco Engineering predicted strong growth in 2022 as the company reported a sharp rise in annual profit and increased its dividend.

Adjusted operating profit rose 26% to £340.3m in the year to the end of December as revenue increased 13% to £1.34bn. Pretax profit was up 31% to £314.5m.

The maker of steam control equipment increased its final dividend by 15% to 97.5p a share, taking the annual payout to 136p a share - also up 15%. Spirax-Sarco said it expected strong sales growth in 2022 based on record order books and expansion of global industrial production.

The FTSE 100 company's operating margin rose to a record 25.3% and it said all three of its businesses had record orders. However, Spirax-Sarco said investment spending would shrink the rate of organic revenue growth in 2022 but that the margin would stay comfortably above the pre-pandemic level.

Nicholas Anderson, the company's chief executive, said: "The excellent performance of our group in 2021 is testament to the strength of our organisation, business model and strategy. We remain confident in our ability to navigate the growing uncertainties ahead."

Spirax-Sarco shares rose 3.6% to £117.30 at 09:28 GMT. The shares have dropped 27% in 2022.

Shore Capital analyst Tom Fraine said the company had reported "outstanding results" but was cautious about the outlook.

Fraine said: "In the long-term, we believe Spirax can continue gaining market share and grow ahead peers … However, we think the risks the company faces may be greater than the market perceives with only around half of its revenue driven by defensive markets."