Spirax Shares Rally (LON:SPX) As Firm Reaffirms Outlook, Raises Dividend

Spirax Group (LON:SPX) released its half-year results today, beating expectations on the bottom line, and reiterating its full-year guidance. The Spirax share price is rallying off the back of the print, up 12.7% at 6,830p, threatening a huge red/green move on the YTD with the news.

The company's statutory revenue saw a marginal dip of 1%, landing at £822.2 million compared to £827.0 million in H1 2024. A more significant decline was observed in statutory operating profit, which plummeted by 27% to £106.8 million, dragging the operating profit margin down to 13.0% from 17.8%.

Adjusted figures, which strip out one-off restructuring costs and other non-recurring items, paint a more bullish picture. Organic revenue grew by 3%, outpacing global industrial production growth of 2.5%.

Most importantly perhaps, adjusted operating profit increased by 7% organically to £158.8 million, resulting in an adjusted operating profit margin of 19.3%, and more crucially, a beat on the £151million expected. The company also increased its interim dividend by 3% to 48.9 pence, signaling confidence in its underlying financial health.

A closer look at the segmental performance reveals mixed results. The Steam Thermal Solutions (STS) division saw sales in line with the prior year on an organic basis, with a 3% increase when excluding large projects in China and Korea.

Electric Thermal Solutions (ETS) stood out with a robust 10% organic sales growth, fueled by operational progress and heightened demand from the semiconductor industry. Watson-Marlow Fluid Technology Solutions (WMFTS) experienced a more modest 2% organic sales growth, although a surge in Biopharm orders exceeding 10% suggests stronger growth potential in the latter half of the year.Headwinds, Outlook, and Analyst Views

Currency headwinds continue to pose a challenge, impacting revenue by 3% and adjusted operating profit by 7%, in line with previous expectations. These FX pressures, coupled with one-off restructuring expenses, weighed heavily on the statutory results.

Despite these headwinds, Spirax has reiterated its full-year guidance, anticipating continued organic revenue growth ahead of global industrial production. The company also expects margin improvements in the second half, driven by operational efficiencies and a recovery in key markets.

Nimesh Patel, Group Chief Executive Officer, commented that the first-half results demonstrated the strength of the Group's direct sales business model despite the challenging macroeconomic environment. He highlighted the company's focus on driving demand in MRO and solution-sales across STS and WMFTS Process Industries, along with increased manufacturing throughput in ETS, as key drivers of organic sales growth.

With SPX firmly in the red leading into the report, there was little expected, and a red/green move YTD will be well received by bulls. A raised dividend, a beat on adjusted profit, and a revised guide have proved more than enough to see the share price rally on the day.