Questor: Yes, the share price has fallen 28pc – but this company will profit from net zero

Another day, another set of disappointing company results. This time, the stock in question is engineering business Spirax-Sarco. The FTSE 100 constituent reported a 17pc slump in pre-tax profits in its latest financial year as tough operating conditions weighed on its performance. The company’s sales declined by 1pc on an organic basis but were bolstered by the contribution of acquisitions. This meant revenue was up 4pc year on year. But with lower sales in higher margin segments, the business recorded a 2.9 percentage point fall in its operating profit margin so that it stood at 20.7pc. Given that its operating profit margin had previously declined by 1.7 percentage points in the prior year, from 25.3pc in 2021, its profitability has clearly come under sustained pressure over an extended period. While this is hugely disappointing, it is also very understandable. The company faces a highly challenging trading environment across most of its geographical segments. Indeed, global industrial production growth amounted to a measly 0.3pc during 2023. This was far below upbeat forecasts made at the start of the year, with continued high interest rates having a negative impact on growth rates across major economies. Although this trend is likely to persist in the short run, history shows that...

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