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Spirax-Sarco falls after profits drop 15pct

Published: 05:16 22 Aug 2012 EDT

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Shares in Spirax-Sarco (LON:SPX) tumbled this morning after the peristaltic pump specialist reported a decline in its half-yearly profits despite an improvement in revenues.

Pre-tax profits dropped 15 percent to £51.7 million and earnings per share declined 14 percent to 46.3 pence despite a two percent increase in revenues to £313.5 million from the same period of 2011 amid continued growth in the Asia Pacific region, particularly in China.

The decline in profits was due to higher costs and the impact of lower volumes in the group’s European factories as well as the economic downturn in Latin America. Spirax announced that it will implement a cost cutting programme that should save it £5 million per year and will take full effect in 2013.

The group was upbeat about the outlook for the rest of the year, saying that the second half has started well with stronger organic sales growth of 10 percent in July, benefitting from a “relatively healthy” order book.

As a result, Spirax expects a greater than normal seasonal bias to the second half sales and operating profits and, “given no further deterioration in market conditions or negative movements in average exchange rates, the board expects to make progress in 2012”.

Shares in Spirax-Sarco changed hands at 1,934 pence at 10am, down six percent from Tuesday’s close.

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