Spirax Group plc. · LSE:SPX
Spirax — Spirax-Sarco Engineering — FY2013 Earnings Presentation
29 slides from Spirax's earnings presentation, February 2014
Slide 1: 2013 Results
2013 Results 31st December 2013 Bill Whiteley – Chairman Nick Anderson – Chief Executive David Meredith – Finance Director
Slide 2: Agenda
Agenda 2013 Highlights 2013 Financial Review Operations and Outlook Appendices 2013 Results 31st December 2013 2
Slide 3: 2013 Highlights
2013 Highlights Constant 2013 2012 Change currency Revenue £689.4m £661.7m +4% +4% Operating profit* £151.6m £136.2m +11% +10% Margin* 22.0% 20.6% +140 bps +130 bps Pre-tax profit* £151.1m £134.9m +12% +11% Tax rate 29.8% 29.7% EPS* 138.8p 122.2pˣ +14% +12% DPS 59.0p 53.0p +11% +11% Special dividend
Slide 4: 2013 Financial Review
Agenda David Meredith 2013 Financial Review 2013 Results 31st December 2013 4
Slide 5: Segment revenue changes
Segment revenue changes At constant currency £m +3% +8% -1% +4% +0% 20.0 2013 Sales (£m) 15.0 EMEA 244.3 Asia Pac 182.8 10.0 Americas 132.0 5.0 WM 130.3 Total 689.4 0.0 EMEA Asia Pacific Americas Watson-Marlow FX -5.0 Organic sales versus 2012 -10.0 Steam Spec +3% -15.0 WM +4% -20.0 Group +4% % Chan
Slide 6: Segment operating profit changes
Segment operating profit changes At constant currency £m +26% +6% +6% +7% +1% 12.0 2013 Profit (£m) 10.0 EMEA 48.2 Asia Pac 48.0 8.0 Americas 26.1 WM 39.5 6.0 Corp Exp (10.2) Total 151.6 4.0 2.0 0.0 EMEA Asia Pacific Americas Watson-Marlow FX % Change v 2012 H1 H2 Year Based on adjusted profit at co
Slide 7: Profit bridge
Profit bridge 2012 to 2013 £m 160 • FX gains of 2.7 (2.8) 155 £1.7m – mostly 1.5 translation 2.6 150 6.3 • Year-on-year 151.6 restructuring 145 cost reductions 3.5 £3.5m 140 1.7 • Profit increase in all segments at 135 constant 136.2 currency 130 125 120 2012 FX Restructure EMEA Asia Pacific America
Slide 8: Record operating margin
Record operating margin 25.0% 25.0% 20.0% 20.0% 15.0% 15.0% 23.3% 22.4% 21.3% 21.0% 20.6% 19.9% 19.5% 19.3% 10.0% 10.0% 18.6% 17.1% 17.1% 17.1% 17.0% 16.6% 15.9% 15.8% 15.3% 15.0% 15.0% 14.4% 5.0% 5.0% 0.0% 0.0% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 H1 H2 Year 2013 Results 31st December
Slide 9: Adjusted cash flow
Adjusted cash flow Pounds (£) million 2013 2012 • Good increase in Adjusted operating profit* 151.6 136.2 cash from Depreciation and share schemes 25.4 23.8 operations Working capital (7.3) (0.5) • Dividend Capital expenditure (net including R&D) (26.7) (29.7) payments of Adjusted cash from operatio
Slide 10: Dividend growth
Dividend growth 160.0 • …. 100p • Core dividend up 140.0 11% in 2013 120.0 • 11% pa increase over last ten Pence per share 100.0 years • 46 year dividend 80.0 record, 11% pa 60.0 25p +8% +11% increase +14% +19% 40.0 +11% +8% 41p +13% +11% +11% +6% 20.0 18p 0.0 2004 2005 2006 2007 2008 2009 2010 2011
Slide 11: Key performance indicators
Key performance indicators • Good organic 2013 2012 sales growth of Organic sales growth +4% +5% 4% Sales per employee +4% +4% • Significantly higher margin of Operating profit margin* 22.0% 20.6% 22.0% Adjusted cash from operations £143.0m £129.8m • Continued good cash conversion Cash conversion* 9
Slide 12: Underlying operating margin factors
Underlying operating margin factors Effects on underlying margins* 2013 2014 Currency movements Operating leverage Sales pricing (vs. inflation) Material prices Manufacturing strategies Business and product mix Business development investment * The arrows as shown are qualitative and indicate direct
Slide 13: Operations and Outlook
Agenda Nick Anderson Operations and Outlook 2013 Results 31st December 2013 13
Slide 14: Europe, Middle East & Africa (EMEA)
Europe, Middle East & Africa (EMEA) Constant 2013 2012 Change currency Sales £244.3m £232.8m +5% +3% Op profit* £48.2m £36.7m +31% +26% Margin* 19.7% 15.8% +390 bps +350 bps *Based on adjusted Operating profit – see Appendix IV • Organic sales up 3% despite difficult economic conditions • Modest gro
Slide 15: Asia Pacific
Asia Pacific Constant 2013 2012 Change currency Sales £182.8m £166.9m +10% +8% Op profit* £48.0m £43.9m +9% +6% Margin* 26.3% 26.3% +0 bps -50 bps *Based on adjusted Operating profit – see Appendix IV • Sales up 8% at constant currency – good growth across product groups • Market conditions remained
Slide 16: Americas
Americas Constant 2013 2012 Change currency Sales £132.0m £137.5m -4% -1% Op profit* £26.1m £26.2m +0% +6% Margin* 19.8% 19.1% +70 bps +130 bps *Based on adjusted Operating profit – see Appendix IV • Organic sales almost flat – reported down 4% due to exchange headwinds • North America sales down –
Slide 17: Watson-Marlow Pumps
Watson-Marlow Pumps Constant 2013 2012 Change currency Sales £130.3m £124.5m +5% +4% Op profit* £39.5m £36.8m +7% +7% Margin* 30.3% 29.6% +70 bps +90 bps *Based on adjusted Operating profit – see Appendix IV • Sales up 4% at constant currency – non-repeat of large projects slowed H2 growth • Overall
Slide 18: Segment profit contributions
Segment profit contributions Good sales and profit balance between segments Segment profit Segment sales contribution contribution • Improved EMEA 100% profit 19% 24% 24% 24% 26% 24% contribution 80% 15% 19% 19% 19% 18% 16% • Closer alignment 60% of segmental 24% 30% 27% 40% 27% 27% 31% sales and pr
Slide 19: Priority focus areas
Priority focus areas • Sales growth in developed markets • Emerging markets • Leverage R&D investments • Supply chain effectiveness • People development 2013 Results 31st December 2013 19
Slide 20: Increasing addressable market through product development
Increasing addressable market through product development • Qdos metering pump solves turbidity testing dilemma for Welsh Water • The problem: bellows pump technology introducing air into water samples, affecting reliability and causing false readings • The requirement: a pump with a constant, pulse
Slide 21: Solution selling a key driver of sales growth
Solution selling a key driver of sales growth • Spirax Sarco solution increases productivity and saves energy at Menasha Packaging, USA • The problem: temperature fluctuations of mill rollers affecting product quality and wastage • The requirement: precise temperature control in the manufacturing pr
Slide 22: Group benefits from UK site consolidation
Group benefits from UK site consolidation • The problem: operational inefficiencies arising from manufacturing across three Cheltenham locations • The requirement: one integrated manufacturing site • The solution: Unity Project to consolidate manufacturing at Runnings Road location plus the construc
Slide 23: Summary
Summary • Organic sales up 4% • Operating profit up 26% in EMEA at constant currency • Operating margin jumped to record 22.0% • Good cash generation, 94% cash conversion • Dividend up 11% • Further progress expected in 2014 2013 Results 31st December 2013 23
Slide 24: Focused on consistent growth and creating shareholder value
Spirax-Sarco Engineering plc 2013 Results 31st December Focused on consistent growth and creating shareholder value 2013 Results 31st December 2013 24
Slide 25: Appendices
Spirax-Sarco Engineering plc »? ~ Ms } ¥ Appendices
Slide 26: Appendix I - Return on capital employed
Appendix I - Return on capital employed Pounds (£) million 2013 2012 Working Capital Inventories 104.2 103.7 Trade receivables 145.4 145.7 Prepayments, other current assets 23.7 17.7 Trade, other payables & current tax (103.0) (102.9) Total working capital 170.3 164.2 Property, plant & equipment 174
Slide 27: Appendix II - Cash conversion
Appendix II - Cash conversion Pounds (£) million 2013 2012 Adjusted cash generated from operations 143.0 129.8 Adjusted Operating Profit* 151.6 136.2 Cash conversion 94% 95% * See Appendix IV for definition of profit measures 2013 Results 31st December 2013 27
Slide 28: Appendix III - Currencies
Appendix III - Currencies Average exchange rates • Given the profile 2012 2013 % 2014* % of currency Spirax weighted index 99.5 100.0 - 105.3 -5% movements in 2014, each 1% Bank of England index 83.0 81.7 +2% 86.3 -5% movement in the Spirax currency US$ 1.59 1.57 +1% 1.68 -7% weighted index Euro 1.2
Slide 29: Appendix IV - 2013 Note on profit measures
Appendix IV - 2013 Note on profit measures The Group uses adjusted figures as key performance measures in addition to those reported under adopted IFRS. The Group’s management believes these measures provide valuable additional information for users of the financial statements in understanding the G
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