November 22, 2016 / 10:19 AM / 3 years ago

UK engineers back forecasts thanks to weak sterling

(Reuters) - Engineers Spirax-Sarco Engineering Plc (SPX.L), Spectris Plc (SXS.L) and Rotork Plc (ROR.L) said on Tuesday their full-year results would meet market expectations as the three companies got most of their revenue from outside the United Kingdom.

A weak sterling and cost-reduction programs helped these British engineering firms keep their forecasts intact amid declining global industrial demand.

Engineering companies have been struggling as customers in the oil, gas and mining industries cut orders and wait longer than usual to replace parts in the face of a widespread slump in commodity prices.

The three companies supply products such as steam control valves, valve-automation equipment, pumps, and testing and control equipment to industries including mining, oil and gas, pharmaceuticals and transportation.

Spirax-Sarco said industrial production growth rates have remained at close to nil-growth levels throughout the year, in both developed and emerging markets.

The three engineers have adopted cost-reduction programs such as cutting jobs, finding better sources for raw materials and reducing production overhead costs to battle weak demand.

A 16 percent fall in the pound's value against the dollar GBP= up to Monday's close since Britain's vote in June to leave the European Union has provided a tailwind that would help the three companies meet market expectations.

Spirax-Sarco received about 9 percent of its 2015 revenue from the United Kingdom, Spectris received 4 percent and Rotork got 12 percent.

Rotork shares were up 7 percent, making the stock the biggest percentage gainer on the FTSE mid 250 index .FTMC on Tuesday on the London Stock Exchange. Rotork shares were trading at 216 pence at 0921 GMT, while Spirax-Sarco shares were flat at 4212 pence.

Spectris shares fell 1 percent to 2,036 pence after the company posted a 4 percent dip in like-for-like sales for the four-month period ending October. Total revenue for the same period increased 18 percent.

Reporting by Vidya L Nathan in Bengaluru; Editing by Martina D'Couto

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