Spirax-Sarco Engineering PLC said a ‘challenging trading environment’ impacted 2023 earnings, but forecast a return to growth this year.

The Cheltenham, England-based thermal energy management and pumping company said pretax profit fell 21% to £244.5 million in 2023, from £308.1 million the previous year. Basic earnings per share dropped by 18% to 249.5 pence from 305.1p.

Spirax-Sarco said revenue increased 4.5% to £1.68 billion from £1.61 billion, reflecting full-year contributions from acquisitions, although organically it decreased by 1%. Operating costs rose 8.2% to £1.40 billion from £1.29 billion.

Adjusted operating profit fell 8% to £349.1 million from £380.2 million, while the margin lowered to 20.7% from 23.6%. Spirax-Sarco said this reflected an adverse mix impact of lower volumes in higher margin businesses.

The company did, however, increase its total 2023 dividend to 160.0p per share from 152.0p. This included an increased final dividend of 114.0p, up from 109.5p for 2022.

‘Our financial results in 2023 were impacted by a more challenging trading environment than we had anticipated at the start of the year,’ commented Chief Executive Officer Nimesh Patel,‘with a number of external headwinds to our highest margin businesses.’

However, he reassured investors: ‘We have a long track record of navigating volatile macroeconomic conditions to deliver growth ahead of industrial production.’

Spirax-Sarco expects to return to high-single-digit organic sales growth this year, and for its adjusted operating profit margin to achieve low double-digit growth.

Spirax-Sarco also said adjusted operating profit will be more weighted than usual towards the second half of the year, in part reflecting ‘strong demand growth’.

Shares in Spirax-Sarco traded 7.4% higher at 11,030.00p each on Wednesday morning in London.

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