Spirax-Sarco engineers improved performance

Spirax Sarco Engineering is battling away as demand remains "resilient", despite weakening global macro-economic conditions in recent months.

Total sales in sterling were ahead 2% in the first 10 months of 2012, after including the impact of unfavourable currency movements and two small disposals last year.

More specifically, and for the four months ended October 31st, organic sales increased 6%, ahead of the rate of growth reported in the first half year.

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Over the same period operating profit was 8% ahead on a constant currency basis. Against a decline of 3% for the first half of the year, this means that for the first ten months ending October 31st operating profit was 2% ahead of last year on a constant currency basis.

Notably, the Asia Pacific region and the Watson-Marlow pumps business achieved strong double-digit sales growth in the period. The Americas saw a more modest advance while sales in the Middle East and Africa (EMEA) segment experienced a slight decline.

As regards Watson-Marlow, the improvement in operating profits was due to the planned increases in R&D and market development costs in the first half year now unwinding in the second half. The results also improved in EMEA, as the cost base in Europe is being progressively lowered and the profitability of its supply operations increased.

In its trading update the steam trap and pump maker took care to stress: "Although our forward visibility remains short and we are not immune to a worsening in our markets, which can be reflected fairly quickly in our mid-cycle business, the board continues to expect the group to make progress for the full year."

Net cash balances at the end of October 2012 increased to £43m compared with £9m at June 30th 2012.

The interim dividend of £12m will be paid on November 9th.

CM