Spirax-Sarco Engineering PLC (LON:SPX) shares dropped on Wednesday as the FTSE 100 group’s first-half sales grew faster than expected but fears grew of a global industrial slowdown in the second half.
During the first half of 2019, global industrial production growth slowed to 1.6% from 3.5% in the first half of 2018, with flat growth in Europe and Asia Pacific, China and North America slowing and Latin America contracting.
The latest forecast for global industrial production growth for the whole of 2019 is 1.6%, approximately half the 3.1% achieved in 2018.
As for steam-control specialist Spirax, revenues of £591.2mln were 8% higher both organically and at reported rates.
Adjusted operating profit margins contracted 70 basis points to 21.9%, resulting in an adjusted profit before tax of £124.6mln, up 3% on last year.
Margins shrank due to the sale of the HygroMatik business, a negative currency impact and the lower operating profit in Chromalox.
While Chromalox grew sales organically against a very tough comparison last year, its profitability deteriorated, which chief executive Nicholas Anderson said was the “only disappointment of this period” and work to improve its operational performance had been stepped up.
Overall, he said the overall full-year expectations remain unchanged, with a consensus forecast for full-year adjusted profit before tax of £267.4mln.
Spirax shares were down 6% to 8,125p on Wednesday morning.