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Spirax Sarco builds up a head of steam with half year results

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Written by: Andrew Merrell | Posted 11 August 2017 6:58

Spirax Sarco builds up a head of steam with half year results

Increased manufacturing efficiency, strong overseas sales, multi-million pound acquisitions and the favourable currency winds of Brexit have all helped propel Spirax Sarco to a 31 per cent growth in profits.

The Cheltenham-headquartered world-wide engineering firm has released half year results showing what it is calling “strong organic growth”.

Revenue is up 31 per cent to £101.2million. Brexiteers may well seize upon the news of the positive influence for the firm on currency markets. At constant exchange rates growth would have been nearer 13 per cent, according to the business. Organic sales are less still.

Overall revenue was up 25 per cent (again, 13 per cent at constant currency) from £344million to £428.6million.

Nicholas Anderson, chief executive of Spirax Sarco, a specialist in steam engineering, said: “We are very pleased to report organic sales growth of five per cent in the first half, ahead of global industrial production on growth, and organic profit growth of eight per cent.

“We have seen good organic sales growth in both the steam specialities business and Watson-Marlow, reflecting the benefits of the successful implementation of our strategy. In addition on, this year we have completed two significant acquisitions; Gestra and Chromalox.

“Currency effects have been favourable and combined with the growth from the acquisitions that were completed in 2016 and in the first half of this year, we have seen total sales and profit growth of 25 per cent and 31 per cent respectively in the reporting period.”

The firm bought German-headquartered Gestra AG and its overseas subsidiaries for £186million in May and USA-based ChromaloxInc in July for $415million.

Its purchase of pump manufacturer Watson Marlow in 1990 had proved a shrewd move. It described the firm as having a “very good start to the year” in 2017.

Having its fingers in numerous markets is paying dividends and there was good news on the global economy too.

“Following a sustained period of decline, global industrial production growth rates rebounded strongly in the first half of this year and our business performance has reflected that with good growth,” said the half year report.

“While current forecasts for global industrial production growth are slightly lower for the second half of the year, we anticipate that our markets will remain relatively stable for the remainder of this year, albeit with some regional variations.”

As for those Brexit benefits – nothing lasts forever it seems.

“The devaluation of sterling, following the UK’s decision in June 2016 to exit the European Union, resulted in much more favourable exchange rates in the period when compared to the first half of 2016. We anticipate that currency effects will have a significantly lower impact in the second half of the year,” said the report.

Click to view the Spirax Sarco Half Year Results 2017.

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