West Country engineering firm Spirax Group (SPX) is being shunned by investors after its first-half results.

The numbers themselves were pretty disappointing but more damaging was the downgraded guidance for 2024 and the implications this has for 2025. The company moved from mid-to-high-single-digit growth to mid-single-digit growth in revenue and from modest margin growth to flat margins.

The company makes products which help regulate the flow of fluids and steam. After a long period of consistent returns, it enjoyed bumper vaccine-related demand during the pandemic but that has evaporated and the shares are now at less than half the highs above £170 attained in 2021.

While some of this is thanks to a normalisation of a valuation which had got ahead of itself and wider economic uncertainty, the company has also endured material operational issues of its own making.

It has also made acquisitions linked to the energy transition, which, while holding long-term promise, have made the story more complex.

Berenberg analyst Andrew Simms lays the situation out in stark terms: ‘Group margins, returns and cash flow are below historical levels and unlikely to materially recover to previous levels in the near term, in our view.’