Spirax Group Plc. · LSE:SPX
Spirax — H1 2024 Earnings Presentation
24 slides from Spirax's earnings presentation, August 2024
Slide 1: 2024 Half Year Results
2024 Half Year Results Six months ended 30 June 2024 Nimesh Patel Group Chief Executive Officer Phil Scott Interim Chief Financial Officer
Slide 2: Financial highlights
Financial highlights 2 • Organic sales growth: 1%; Operating profit broadly flat organically • Organic sales growth (excluding China): 3%; well ahead of IP (excluding China): 0.8% • STS organic decline: -1%; against strong comparator and impacted by weak IP • ETS organic growth: 5%; operational prog
Slide 3: Global Industrial Production growth (IP)
Global Industrial Production growth (IP) 3 H1 2024 H2 2024 FY 2024 October 2023 1.8% 3.0% 2.4% February 2024 1.2% 2.1% 1.7% April 2024 1.9% 2.1% 2.0% July 2024 1.5% 1.5% 1.5% Industrial Production growth 2024 H1 H2 FY Europe 0.2% 1.3% 0.8% North America 0.0% 1.0% 0.5% South America -2.1% -0.2% -1.2%
Slide 4: Financial review
Financial review Phil Scott Interim Chief Financial Officer
Slide 5: Financial summary
Financial summary 5 (£m) 30 June 2024 30 June 2023 Reported Organic⁺ Revenue 827.0 850.8 (3)% 1% Operating profit* 160.3 171.7 (7)% (1)% Operating profit margin* 19.4% 20.2% (80) bps (30) bps Net finance expense (21.9) (18.2) 20% Pre-tax profit* 137.9 153.5 (10)% Tax rate* 26.5% 25.4% 110 bps EPS* 1
Slide 6: Sales bridge
Sales bridge 6 H1 2024 H1 2023 Year-on-year organic growth £m £m H1 2024 H1 2023 STS 430.8 459.8 (1.1)% 15.0% ETS 197.7 192.5 5.2% 6.5% WMFTS 198.5 198.5 3.0% (20.5)% Group 827.0 850.8 1.3% 2.1%
Slide 7: Profit bridge
Profit bridge 7 Trading Profit (£m) Year-on-year organic growth Trading Margin Organic Change H1 2024 H1 2023 H1 2024 H1 2023 H1 2024 H1 2023 STS 101.2 112.2 (2.4)% 24.9% 23.5% 24.4% (30) bps ETS 29.1 26.9 11.7% (5.3)% 14.7% 14.0% 80 bps WMFTS 48.8 48.9 2.4% (46.7)% 24.6% 24.6% (10) bps Corporate (1
Slide 8: Cash flow
Cash flow 8 Cash flow (£m) 30 June 2024 30 June 2023 • Cash conversion of 53% in H1 Adjusted operating profit 160.3 171.7 (H1 2023: 48%) – full year cash Capital expenditure (net) (39.7) (49.8) conversion expected to be Working capital changes (56.2) (62.7) approximately 75% Depreciation, amortisati
Slide 9: Operations & Outlook
Operations & Outlook Nimesh Patel Group Chief Executive Officer
Slide 10: Group operational highlights
Group operational highlights 10 • Development of Group commercial, operational and financial priorities • Continuing progress in Safety; implementing mandatory machine guarding • Andrew Mines (MD Watson-Marlow) to replace Armando Pazos as MD ETS • Investment in high temperature heat pump technology
Slide 11: Operational progress
Operational progress 11 • China (20% of sales) down 12% • Industrial Process Heating order • Early signs of improvement in organically, due to large projects book remains at high levels Biopharm demand • China team pivoting to focus on • Delivering operational improvement • Sector focus in Process I
Slide 12: Full year outlook
Full year outlook 12 Low-single digit organic growth Mid-single digit organic growth Mid-single digit organic growth • Seasonality • Continuing strong demand for electrification • Softer comparator in second half • Second half IP • No meaningful recovery in Semicon in 2024 • Biopharm recovery unlike
Slide 13: Strategic update
Strategic update Nimesh Patel Group Chief Executive Officer
Slide 14: Developing our long-term strategic plan
Developing our long-term strategic plan 14 Enhance Build • Critical products, solutions and expertise • Well positioned to capitalise on structural growth trends • Unique Business Model • Focusing our investment and capability • Highly diversified and resilient; low ticket, on clear growth opportuni
Slide 15: Well positioned to capitalise on key global trends
Well positioned to capitalise on key global trends 15 Increasing demand for Resource Ageing Changing consumer goods efficiency populations lifestyles Emerging middle class Industrial thermal energy Over 65s increasing to Sustainability, health and ~ additional 800 million people ~ 20% of global CO2
Slide 16: Investing in future growth opportunities
Investing in future growth opportunities 16 Energy Transition Decarbonisation of steam Energy Transition Electrification of process heating Digital connections Organisational capabilities
Slide 17: Prioritising operational improvements
Prioritising operational improvements 17 Leveraging Pursuing Reducing Delivering commercial manufacturing organisational value from excellence excellence complexity acquisitions
Slide 18: Delivering long-term compounding growth
Delivering long-term compounding growth 18 Preserving Investing in Future Executing on Fundamental Strengths + Growth Opportunities + Operational Priorities = Medium term • Sustaining mid-single digit organic sales growth (CAGR) • Delivering margins of 22% - 23% • Increasing returns on capital • Cha
Slide 19: Appendix
Appendix
Slide 20: Appendix I: Exchange rates
Appendix I 20 Exchange rates Average exchange rates Average half year 2024 Average half year 2023 Change US dollar 1.26 1.24 2% Euro 1.17 1.14 3% Renminbi 9.11 8.60 6% Won 1,708.29 1,606.62 6% Brazilian real 6.47 6.26 3% Argentine peso 1,087.16 263.21 313%
Slide 21: Appendix II: Exchange rate impact
Appendix II 21 Exchange rate impact on 2023 reported financial performance 2023 Revenues @2023 average FX £1,683m @ 2024 projected FX £1,615m (4%) 2023 Adjusted Operating Profit @ 2023 average FX £349m (20.7%) @ 2024 projected FX £321m (20.0%) (8%)
Slide 22: Appendix III: Reconciliation of operating profit
Appendix III 22 Reconciliation of Operating profit to Adjusted operating profit The Group uses adjusted figures as key performance measures in addition to those reported under IFRS. The Group’s management believes these measures provide valuable additional information for users of the financial stat
Slide 23: Appendix IV: Additional guidance
Appendix IV 23 Additional guidance (for modelling purposes) 2023 Actual 2024 Guidance Group Revenue £1,683m Mid-single digit organic growth Revenue: 2% adverse Revenue: (4)% adverse Exchange rate impact Adjusted Operating Profit: 2% adverse Adjusted Operating Profit: (8)% adverse Corporate costs £28
Slide 24: Environmental and social progress
Environmental and social progress 24 Key strategic targets: • Net zero (scope 1 and 2) GHG emissions by 2030, with an interim target of 50% reduction by 2025 (vs. 2019 baseline) • 20% reduction in Group energy use from plant, equipment and building assets by 2025 (vs. 2019 baseline) Progress in H1 2