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Spirax-Sarco Engineering Plc Reports Another Strong Half-Year

The shares of Spirax-Sarco (LSE: SPX) climbed 3% to 2,983p in early London trading this morning after the steam-systems specialist engineer revealed a 20% jump in adjusted half-yearly profits to £48m.

While the group’s revenues grew by only 4% to £331m for the period, Spirax benefited from an uplift in operating margins from 18% to 20%. In line with today’s positive results, the company announced a 13% increase in its interim dividend to 18 pence per share.

Spirax-Sarco also confirmed that its Watson-Marlow pumps enjoyed further growth in sales to £64m, with the division’s operating margins improving from 27% to 28%. Overall, the group’s free cash flow was £37m, 24% higher than in the first half of 2012.

Giving his outlook for the rest of the year, chief executive Mark Vernon added:

“Our usual seasonal profit bias towards the second half was exaggerated in 2012 by the timing of certain costs and investments.  We expect to revert to a more normal first half/second half profile this year with tougher sales and profit comparatives in the fourth quarter of this year.  However, the Board is confident that the Group will make good progress in 2013.”

With a market cap of £2.3bn, Spirax-Sarco’s shares trade at 21 times their expected earnings, and offer a prospective dividend yield of 2%.

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 > Mark does not own any share mentioned in this article.