August 7, 2014 / 9:11 AM / 3 years ago

UPDATE 1-Spirax-Sarco says order backlog to lift second-half sales

* H1 pretax profit 63.5 mln stg vs 65.5 mln stg

* H1 revenue 319.2 mln stg vs 331.6 mln stg

* Interim dividend 19.5 pence vs 18.0 pence

* Shares rise as much as 2.5 pct (Adds details, analyst comment, share price)

Aug 7 (Reuters) - Spirax-Sarco Engineering Plc, a maker of steam-control valves and pumps, said it expects a larger order backlog than a year earlier to help it overcome “challenging” market conditions in the second half of the year.

Spirax-Sarco’s shares rose as much as 2.5 percent on Thursday.

The British company, a supplier to the healthcare and petrochemical industries, reported a 4 percent drop in first-half revenue, due to a stronger pound. Sales rose 4 percent on a constant currency basis.

Spirax-Sarco said its order backlog in the Asia-Pacific region, the second-biggest contributor to its revenue, was 13 percent higher than in the comparable period of last year, underpinning expectations of a stronger second-half performance.

“A stronger backlog than at this time last year should support full-year consensus expectations,” UBS analysts wrote in a note. “Spirax remains a highly consistent business, with good delivery.”

The Cheltenham, England-based company raised its interim dividend to 19.5 pence per share from 18.0 pence a year earlier.

Like competitors Rotork Plc and IMI Plc, Spirax-Sarco was hurt by the strengthening pound in the first six months of the year.

First-half revenue fell to 319.2 million pounds ($537.6 million) from 331.6 million pounds a year earlier. Pretax profit fell to 63.5 million pounds from 65.5 million pounds.

“Currency movements were unfavourable with sterling stronger against all currencies in which we operate,” the company said.

The average exchange rate of the pound to the U.S. dollar was 7 percent lower in the first half of 2014 than a year earlier, Spirax-Sarco said. The average rate of the pound to the euro was 3 percent lower.

Spirax-Sarco said economic conditions in Europe, the Middle East and Africa (EMEA) - which together account for more than a third of its revenue - were “challenging”. Political events in eastern Europe had created more uncertainty, it said.

Spirax-Sarco’s shares were up 2.2 percent at 2752 pence at 0908 GMT. ($1 = 0.5938 British Pounds) (Reporting by Roshni Menon and Aashika Jain in Bangalore; Editing by Gopakumar Warrier and Robin Paxton)

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