Spirax-Sarco Engineering shares drop as production loses steam

The price of shares in FTSE 100 energy management and pumping specialist Spirax-Sarco Engineering (LON:SPX) has dropped by 4.3% to 8,240p (as of 12:00 BST) as industrial production growth rates fell during the six months ended 30th June. Revenues for the half-year were up by 8%, but operating profit margins declined by 130 basis points.

CEO Nicolas Anderson said: “We are pleased to report strong organic sales growth of 8% in the first half of the year and organic operating profit growth of 4%, with all three businesses delivering organic sales growth ahead of industrial production. Both the Steam Specialties and Watson-Marlow businesses achieved strong organic sales growth and margin progression, reflecting the successful implementation of our strategy and its focus on self-generated growth. Chromalox also grew sales organically against a very tough comparison.

“The only disappointment of this period was a profitability deterioration in Chromalox so we have intensified work to improve its operational performance. Our original expectations for this business remain unchanged. While the Group’s strong first half organic sales growth was ahead of our expectations, industrial production growth forecasts for the second half of the year have weakened below earlier estimates. As a result, our overall full year expectations remain unchanged“.