Spirax retains outlook but warns of FX impact on annual results

Fluid technology and thermal solutions group Spirax has left its full-year outlook unchanged after increasing organic sales across all three of its businesses in the third quarter, but warned of a slight impact on results from currency movements.

The company, formerly known as Spirax-Sarco Engineering, said it continues to expect mid-single digit organic revenue growth in 2024 with an adjusted operating profit margin of 20%, in line with last year when adjusted for currency headwinds.

However, if exchange rates at the end of October were to prevail over the remainder of the year, it would result in a 1% additional currency headwind on both sales and profits, the company said.

Organic sales growth over the first ten months of the year was ahead of the first half with constant-currency sales above last year's levels across all three businesses.

In particular, the third quarter saw a return to growth in the Steam Thermal Solutions division after a 1% decline in the first half, though sales in China – which accounted for 20% of the division's revenues in 2023 – continued to be impacted by the weakness in large orders seen during the first half.

In Electric Thermal Solutions, organic sales growth was higher than the 5% reported in the first half, while organic growth continued at the Watson-Marlow Fluid Technology Solutions division after 3% growth in the first half.

The macro outlook for the wider industrial production industry continued to be "weak" during the third quarter, with output lower than previously forecast across Spirax's key geographic markets.

Full-year global industrial production, excluding China, is now expected to grow by just 0.9% this year, compared with a 1.5% projection in August, while conditions in China "continue to remain challenging", Spirax said.