Aug. 8 (Bloomberg) -- Spirax-Sarco Engineering Plc, reported a 17 percent increase in first-half adjusted earnings as the provider of industrial and commercial steam systems increased sales in China and improved efficiency in Europe.
Operating profit excluding certain non-operational items climbed to 68.1 million pounds ($106 million), the industrial engineering company said today in a statement. Revenue increased 6 percent to 331.6 million pounds.
Asia-Pacific sales rose 11 percent to 80.8 million pounds, boosted by demand in China and Korea. China is now the biggest contributor to sales and profit for the Cheltenham, England-based company, accounting for 11 percent of revenue. Operating profit in the Europe, Middle East and Africa region advanced 41 percent, after restructuring in Europe in the second half of 2012 and improved efficiency at factories.
“Although we anticipate continued sluggish economic conditions in most of our markets and a challenging fourth-quarter comparison, the board expects the group to make good progress in 2013,” Chief Executive Office Mark Vernon said.
The shares rose as much as 4.7 percent, the biggest advance since May 28. The stock was up 4.1 percent at 3,009 pence as of 2:59 p.m. in London, taking the advance to 28 percent this year and valuing the company at 2.27 billion pounds.
“Profits and margins have increased strongly year-on-year and we expect further good growth despite a challenging back-drop,” Scott Cagehin, an analyst at Numis, wrote in a note today. “The high cost of energy, increasing environmental regulation and the trend to outsourcing by its customers should all provide good demand prospects.”
Numis has an add recommendation on the shares with a price target of 3,200 pence.
The Mexico and Argentina territories performed “exceptionally well” in the Americas, partly offset by weaker results in the U.S. and Canada, according to Spirax-Sarco’s statement.
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