Spirax Sarco heading for 'more normal' year after good start to 2013

Steam trap and pump maker company Spirax-Sarco has said it continued to see 'reasonably good' base business since the start of the year, but admitted customer expenditure has been restrained for the more costly plant improvement and energy saving projects.

The group said in an interim management statement that the year-to-date has been in line with its expectations and ahead of last year, with sales increasing 6.0% in the four months to the end of April.

"We achieved growth in all segments, led by good organic sales growth in Asia Pacific followed by Watson-Marlow," the firm commented.

"We saw modest organic sales growth in Europe, Middle East and Africa (EMEA), which was encouraging given the difficult economic background. In the Americas, strong progress in Latin America offset a decline in the US and Canada, where the softness towards the end of 2012 has continued into 2013."

On a constant currency basis, both operating profit and margin were "comfortably ahead" of the comparable period in 2012, which it said reflected the contribution from higher sales as well as the further cost savings from the restructuring in Europe.

The performance in EMEA was "markedly ahead", driven by favourable currency movements.

The net cash balance rose from £52m at the end of 2012 to £76m at the end of April.

Spirax added: "Our business is seasonally biased to the second half and we are anticipating a more normal first half/second half profile this year. Given the group's robust business model and fundamental strengths, the Board remains confident that the group will make further progress in 2013."

Broker Investec also commented that the 2013 fiscal year looks set to be "more normal" and said the progress made so far has matched up to its expectations.

It did however reduce its target price to 2,600p "due to the de-rating of peers", but said it retained a "hold" recommendation.

The share price rose 0.07% to 2,760p by 08:40 Thursday.