Production slows at engineering giant as global markets contract

Global engineering firm Spirax Sarco says production slowed in the last quarter as markets across the world continue to contract.

The company said weak demand from customers in the semiconductor, pharmaceutical and biotechnology has persisted in the past four months.

The Gloucestershire business does do not anticipate any recovery in demand from these sectors in the remainder of 2023, with demand now likely to improve during 2024.

As a result, sales growth for the four months ended 31st October across all three businesses was below expectations, with group revenues for the ten months ended 31st October marginally below the corresponding prior year period, excluding the impact of acquisitions, disposals and currency effects.

Spirax anticipate  full year 2023 sales to be lower by between 1% and 2%, with an adjusted operating profit margin slightly improved on the 20.2% delivered in the first half of the year, which is consistent with the lower end of current market estimates2.

During the year, the company has taken actions in all three businesses to appropriately right-size capacity and overhead support costs, while also protecting ability to respond to future growth in demand.

Latest IP forecasts for 2024 by both Oxford Economics and CHR Economics point to 2.5% growth.

Spirax continue to anticipate a recovery in demand in our biopharm and aemiconductor sectors during 2024.

The firm said: “ While it is always challenging to predict the precise timing and scale of demand changes, we remain confident in our continued ability to drive growth above IP.

“Therefore, while it is too early to provide guidance for 2024, we do anticipate a return to revenue growth and improvement in adjusted operating margin in the coming year.”