Spirax Group Plc (SPXSF) Q2 2024 Earnings Call

Investor webinar replay

Replay transcript excerpt

Good morning and welcome to our 2024 first half results presentation. I'm Nimesh Patel, chief executive of Spirax Group, and I'm joined today by Phil Scott, our interim chief financial officer. And also in the audience is Louisa Burdett, who joined the group in July to be our new chief financial officer. The first half of this year has been more challenging than we had anticipated. Our financial results are slightly below our plans. And we have taken a more cautious view for the remainder of 2024. Overall, group organic sales growth was 1.3%, reflecting a weaker macroeconomic environment in key markets in the first half, particularly in China. Estimates for industrial production growth in China vary significantly across different forecast providers. and they've changed materially and often. Therefore, we focused on global IP excluding China, which in the first half was up 0.8%. This compares to our group organic sales growth excluding China of 2.7%, so well ahead of IP. In STS, where China represents nearly 20% of sales and is amongst our most profitable operations, sales and margin were lower on an organic basis. ETS was up organically, driven by continued demand for the electrification of thermal energy and delivery of operational improvements, increasing manufacturing throughput, all of which supported the industrial process heating division. Semicon demand in the industrial equipment heating division has yet to improve, although our customers are signalling a return to orders growth by the end of the year, which would only impact sales next year. Watson Marlowe was also up organically, and we have seen early signs of an improvement in biopharm demand, which is encouraging, but we do not expect a material recovery in sales in the second half. Our adjusted operatin...