Spirax-Sarco experiences 'very strong demand', impacted by supply chain and FX headwinds

Spirax-Sarco stated that in the third quarter, global industrial production grew 4.9%, bouncing back from Covid-19 impacted levels seen in 2020. However, disruptions in global supply chains, which led to material shortages and rising costs, resulted in "a slight" quarter-on-quarter sequential contraction of global IP and led the group to downwardly revise full-year forecasts for 2021 to 7.4% from the 8.6% forecast at the time of its interim results. Full-year 2022 forecasts were also cut to 4.3% from 5.0%.

On the other hand, Spirax-Sarco noted that order books in all three of its businesses had expanded in the four months to the end of October, above expectations at the time of its interim results, with growth in orders highest in its Watson-Marlow unit, driven by continued Covid-19 vaccine-related demand from its customers in the pharmaceutical and biotechnology sector.

However, the FTSE 100-listed firm warned that all three businesses had been "somewhat impacted" by shipment delays, with the effects being greater within the Watson-Marlow and Electric Thermal Solutions divisions.

Spirax-Sarco also cautioned that currency effects had an adverse impact on sales and operating profit, stating that if current exchange rates were to prevail for the remainder of the year, it anticipates close to a 4% adverse impact on full-year sales and profit.

With that said, Spirax still opted to maintain overall full-year guidance and said it expects to report record levels of revenues, profits and operating margins.

As of 0840 GMT, Spirax-Sarco shares were down 4.85% at 16,180.0p.