Spirax Group Plc. · LSE:SPX
Spirax — FY2023 Earnings Presentation
25 slides from Spirax's earnings presentation, March 2024
Slide 1: 2023 Full Year Results
2023 Full Year Results 12 months ended 31 December 2023
Slide 2: Introduction
Introduction Nimesh Patel Group Chief Executive Officer
Slide 3: 3
3
Slide 4: Group businesses
amy Steam ‘Thermal @® Solutions Electric poms a Thermal @ Solutions @™ Watson-Marlow _ @@ Fluid Technology ao Solutions
Slide 5: Overview
Overview 5 • Challenging macroeconomic backdrop in 2023… …forecast to improve in 2024 • Delivered organic growth in IP-linked Businesses… …outperforming global IP • Biopharm destocking continued throughout 2023… …return to growth in H2 2024 • Early action taken to preserve margin… …further improveme
Slide 6: 2023 financial review
2023 financial review Phil Scott Interim Chief Financial Officer
Slide 7: 2023 Group Financial performance
2023 Group Financial performance 7 In line with expectations set out in November Trading Update 31 December (£m) 2023 2022 Reported Organic⁺ Revenue 1,682.6 1,610.6 +4% -1% Operating profit* 349.1 380.2 -8% -12% Operating profit margin* 20.7% 23.6% -290bps -270bps Net finance expense* (39.9) (9.6) P
Slide 8: 2023 Sales bridge
2023 Sales bridge 8 Organic growth in STS and ETS offset by Biopharm decline in WMFTS 2023 Actual (£m) Organic growth (y-o-y) H1 H2 FY H1 H2 FY STS 459.8 450.3 910.1 +15.0% +2.4% +8.4% ETS 192.5 186.0 378.5 +6.5% -2.0% +1.6% WMFTS 198.5 195.5 394.0 -20.5% -16.8% -18.7% Group 850.8 831.8 1,682.6 +2.1
Slide 9: 2023 Profit bridge
2023 Profit bridge 9 Sequential growth in H2 reflects benefit of H1 restructuring and cost actions 2023 Actual (£m) Organic growth (y-o-y) H1 H2 FY H1 H2 FY STS 112.2 111.8 224.0 +24.9% +6.6% +15.0% ETS 26.9 32.3 59.2 -5.3% -3.9% -4.4% WMFTS 48.9 44.8 93.7 -46.7% -39.0% -43.3% Corporate (16.3) (11.5
Slide 10: 2023 Operating margin
2023 Operating margin 10 Margin in H2 higher than H1 despite lower sales £m H1 H2 2023 H1 H2 2022 STS 24.4% 24.8% 24.6% 23.0% 24.5% 23.8% ETS 14.0% 17.4% 15.6% 12.2% 17.9% 15.6% WMFTS 24.6% 22.9% 23.8% 35.5% 30.0% 32.8% Group 20.2% 21.3% 20.7% 23.8% 23.4% 23.6%
Slide 11: Exchange rates
Exchange rates 11 Material exchange rate headwind in 2024 2023 Revenues @ 2023 avg. FX £1,682.6m @ 2024 avg. FX £1,631.9m -3% 2023 Adjusted Operating Profit Margin @ 2023 avg. FX £349.1m 20.7% @ 2024 avg. FX £331.1m -5% 20.3%
Slide 12: 2023 Cash flow
2023 Cash flow 12 Strong cash conversion from lower working capital outflow and capex phasing 31 December (£m) 2023 2022 • Cash conversion of 81%, Adjusted operating profit 349.1 380.2 ahead of guidance Capital expenditure (net) (102.8) (113.5) Working capital changes (9.3) (91.9) • Lower than plann
Slide 13: Operations and outlook
Operations and outlook Nimesh Patel
Slide 14: Global Industrial Production growth (IP)
Global Industrial Production growth (IP) 14 Estimates have continued to be revised downwards * Source: CHR Economics
Slide 15: Steam Thermal Solutions
Steam Thermal Solutions 15 Operational progress in 2023 2024 priorities and guidance • Revenue growth significantly ahead of IP • Continuing investment in growth • Record margin • Growing addressable market • China outlook weakening • Mid-single-digit organic sales growth • Phasing of large project
Slide 16: Electric Thermal Solutions
Electric Thermal Solutions 16 Operational progress in 2023 2024 priorities and guidance • Strong demand growth in industrial process • Ongoing onboarding heating solutions • Semicon demand weak impacting industrial • Chromalox operational improvements equipment heating solutions • High-single-digit
Slide 17: Watson-Marlow Fluid Technology Solutions
Watson-Marlow Fluid Technology Solutions 17 Operational progress in 2023 2024 priorities and guidance • Challenging backdrop for Biopharm • Cost base and capacity well positioned • Process Industries impacted by IP • Anticipate growth in Biopharm demand • Right-sizing and cost control benefits in H2
Slide 18: Environmental and social progress
Environmental and social progress 18 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 2023
Slide 19: Summary and Outlook
Summary and Outlook 19 2023 Summary 2024 Group guidance • Organic revenue growth* in STS and ETS • Mid to high-single-digit organic sales growth • Low-double-digit organic growth in adjusted • Early cost actions mitigated margin impact operated profit • Continued investment in business model • Modes
Slide 20: Strategic priorities – initial thoughts
Strategic priorities – initial thoughts 20 Enhance Build • Well positioned for strong organic growth Long-term growth in all three Businesses: • Built on strong fundamentals • Decarbonisation and sustainability • Supported by strong execution • Digitally enhancing our customer proposition • Sustaini
Slide 21: A differentiated investment case
A differentiated investment case 21 Critical products supporting customers’ Strong Financial critical processes Track Record Self-generated Leading player in Unique direct sales growth with pricing Organic growth Attractive, stable fragmented niche model and strong based on customer > 2x IP margins
Slide 22: Appendix
Appendix Additional financial information
Slide 23: Appendix I: Exchange rates
Appendix I 23 Exchange rates Average exchange rates Average Full year 2023 Average Full year 2022 Change US dollar 1.24_ 1.24 (0.2)%_ Euro 1.15_ 1.17 2.0% Renminbi 8.80 8.32 (5.8)% Won 1,626 1,587 (2.4)% Brazilian real 6.22 6.41 3.2% Argentine peso 383 162 (136.0)%
Slide 24: Appendix II: Reconciliation of Operating profit to Adjusted operating profit
Appendix II 24 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 state
Slide 25: Appendix III: Additional guidance
Appendix III 25 Additional guidance (for modelling purposes) 2023 Actual 2024 Guidance Group Revenue £1,683m Mid to high-single-digit organic growth Revenue: 2% adverse Revenue: 3% adverse Exchange rate impact Adjusted Operating Profit: 2% adverse Adjusted Operating Profit: 5% adverse Corporate cost