Spirax-Sarco maintains FY guidance despite multiple headwinds

Manufacturing company Spirax-Sarco Engineering maintained its full-year guidance on Wednesday despite the global macro-economic outlook weakening since the publication of its full-year results due to ongoing global supply chain constraints, geopolitical uncertainty, Covid-19 related restrictions in Asia, rising inflation, and higher interest rates.

Spirax-Sarco stated organic sales growth in the four months ended 30 April was in line with internal expectations, supported by all three businesses expanding manufacturing capacity and mitigating supply chain constraints.

The FTSE 100-listed firm's Watson-Marlow subsidiary saw sales to the pharmaceutical and biotechnology sector grow over 20%, with the remaining group organic revenue streams growing "significantly above" industrial production growth.

Spirax also noted that its steam specialties manufacturing facility in Shanghai had been subject to local lockdown restrictions since 28 March and was currently running at reduced capacity, impacting sales within China, but with limited impact beyond the Asian nation. The group noted that if the current lockdown eases "in the near-term" and, assuming no further lockdowns take place, it expects sales in China to recover through the remainder of the year.

"Since the announcement of our full-year results, the global macro-economic outlook has weakened reflecting the combined impacts of ongoing global supply chain constraints, geopolitical uncertainty, Covid-19 related restrictions in Asia, rising inflation, and increasing interest rates. As anticipated, the latest global IP growth forecast was lowered to 3.9% from 4.2% at the time of our full-year results in March," said Spirax-Sarco.

"Based on our current expectations of trading conditions in the balance of the year, our very strong order books, and the resilience of our performance through economic cycles, we are maintaining our full-year guidance for the group. We continue to anticipate around 20% growth for Watson-Marlow's sales to the pharmaceutical and biotechnology sector, as well as organic sales growth well above IP for the remainder of the group's organic revenues."

Reporting by Iain Gilbert at Sharecast.com