Spirax Group Plc. · LSE:SPX
Spirax — Spirax-Sarco Engineering — H1 2021 Earnings Presentation
36 slides from Spirax's earnings presentation, Jul 28, 2021
Slide 1: 2021 Half Year Results
2021 Half Year Results Six months ended 30th June 2021 Nicholas Anderson (Group Chief Executive) Nimesh Patel (Chief Financial Officer) Efficient 0 2021 Half Year Results Six months ended 30th June 2021 Safer Sustainable Efficient, Safer, Sustainable
Slide 2: Agenda
Agenda Half Year 2021 Highlights Nicholas Anderson Half Year 2021 Financial Review Nimesh Patel Operations and Outlook Nicholas Anderson 1 2021 Half Year Results Six months ended 30th June 2021 Efficient, Safer, Sustainable
Slide 3: HY 2021 operational highlights
HY 2021 operational highlights • Tireless efforts by our employees to meet strong demand growth • Continued Health & Safety performance improvements • Increased focus on employee wellbeing & development; improved Employee Engagement • Invested in direct sales & service capability; appointed Group Di
Slide 4: HY 2021 performance highlights
HY 2021 performance highlights • IP recovery driving strong demand growth • Extraordinary growth in sales to BioPharm industry • Robust strategy and excellent execution underpins operating leverage • Steam Specialties: strong sales and operating margin growth • Electric Thermal Solutions: sales grow
Slide 5: One Planet: Engineering with Purpose
One Planet: Engineering with Purpose One Planet underpins Informed by a robust One Planet will guide our operations as we work our ESG priorities materiality assessment with others to leave a better world for tomorrow ENVIRONMENTAL HIGHLIGHTS SOCIAL HIGHLIGHTS • Net zero goal brought forward • Lost
Slide 6: Our sustainability initiatives
Our sustainability initiatives DELIVER BIODIVERSITY NET GAIN IMPLEMENT ENVIRONMENTAL IMPROVEMENTS ACHIEVE NET ZERO GREENHOUSE GAS EMISSIONS IN OUR OWN OPERATIONS Protect and restore Absolute Emissions Reductions (%) Zero solvent-based paints biodiversity, delivering a 10% 2023: 2025: 100 net gain by
Slide 7: Agenda
Agenda Half Year 2021 Highlights Nicholas Anderson Half Year 2021 Financial Review Nimesh Patel Operations and Outlook Nicholas Anderson 6 2021 Half Year Results Six months ended 30th June 2021 Efficient, Safer, Sustainable
Slide 8: Financial summary
Financial summary Strong first half performance 30th June 30th June • Revenue up 17%, organically 2021 2020 Reported Organic⁺ Revenue £643.7m £569.7m +13% +17% • Operating profit up 42%, organically Operating profit* £162.9m £119.0m +37% +42% • Operating profit margin of Operating profit margin* 25.
Slide 9: Sales bridge
Sales bridge Strong organic growth supported by recovery from the COVID-19 pandemic • Currency headwind of 4% 700 700 600 49.7 • Total organic increase of 17%: 650 500 – Steam Specialties +13% Sales £m 600 5.1 – ETS +6% 40.4 400 21.2 – Watson-Marlow +35% 550 HY2020 data 300 643.7 200 500 569.7 100 4
Slide 10: Profit bridge
Profit bridge Positive impacts of higher demand and operational gearing 180 • Currency headwind of 4% 170 24.1 2.4 160 • Total organic increase of 42%: 140 150 – Steam Specialties +36% 2.7 120 – ETS +32% 23.9 100 – Watson-Marlow +51% 130 £m 4.4 80 • Central expenses reflect 162.9 60 110 some revenue
Slide 11: Operating margin
Operating margin Record operating profit margin of 25.3% • Record margin achieved 25% • Operating margin 25.3%, up 25.3% 440 bps organically 20% • Organic margin movement: – Steam Specialties +430 bps – ETS +250 bps 15% – Watson-Marlow +400 bps – • Second-half margin expected to be in line with firs
Slide 12: Good cash conversion
Good cash conversion Cash flow (£ million) 30th June 2021 30th June 2020 Adjusted operating profit* 162.9 119.0 • Strong cash generation; Depreciation and amortisation (excluding IFRS 16) 17.8 18.0 good conversion˄ of 85% Depreciation of leased assets 5.7 6.0 Pensions/Share plans 2.4 1.5 • Continued
Slide 13: Agenda
Agenda Half Year 2021 Highlights Nicholas Anderson Half Year 2021 Financial Review Nimesh Patel Operations and Outlook Nicholas Anderson 12 2021 Half Year Results Six months ended 30th June 2021 Efficient, Safer, Sustainable
Slide 14: Annual IP growth rates by quarter
Annual IP growth rates by quarter IP Index Q4 2019 = 100 110.0 Forecast 106.4 105.0 104.4 102.6 103.1 104.4 100.9 103.2 99.8 100.0 99.7 100.0 102.0 100.0 101.0 Index - Q4 2019 = 100 100.6 97.6 95.2 95.0 89.9 90.0 Y-o-Y Global IP growth Forecast 2019 2020 2021 2022 85.0 27/Jul/21 1.3% (3.9%) 8.5% 5.0
Slide 15: Steam Specialties
Steam Specialties 30th June 2020 Exchange Organic 30th June 2021 Organic⁺ Reported Sales £331.7m (£10.2m) £40.4m £361.9m +13% +9% Operating profit* £68.0m (£2.1m) £23.9m £89.8m +36% +32% Margin* 20.5% 24.8% +430 bps +430 bps ⁺ Organic measures are at constant currency and exclude contributions from
Slide 16: Steam Specialties: Europe, Middle East and Africa
Steam Specialties Europe, Middle East and Africa 30th June 2020 Exchange Organic 30th June 2021 Organic⁺ Reported Sales £152.3m (£1.3m) £15.5m £166.5m +10% +9% Operating profit* £25.9m - £10.6m £36.5m +41% +41% Margin* 17.0% 21.9% +480 bps +490 bps ⁺ Organic measures are at constant currency and exc
Slide 17: Steam Specialties: Asia Pacific
Steam Specialties Asia Pacific 30th June 2020 Exchange Organic 30th June 2021 Organic⁺ Reported Sales £105.4m (£1.0m) £15.6m £120.0m +15% +14% Operating profit* £28.4m - £9.1m £37.5m +32% +32% Margin* 26.9% 31.3% +400 bps +440 bps ⁺ Organic measures are at constant currency and exclude contributions
Slide 18: Steam Specialties: Americas
Steam Specialties Americas 30th June 2020 Exchange Organic 30th June 2021 Organic⁺ Reported Sales £74.0m (£7.9m) £9.3m £75.4m +14% +2% Operating profit* £13.7m (£2.1m) £4.2m £15.8m +36% +15% Margin* 18.5% 21.0% +340 bps +250 bps ⁺ Organic measures are at constant currency and exclude contributions f
Slide 19: Electric Thermal Solutions
Electric Thermal Solutions 30th June 2020 Exchange Organic 30th June 2021 Organic⁺ Reported Sales £88.9m (£5.1m) £5.1m £88.9m +6% 0% Operating profit* £9.4m (£0.9m) £2.7m £11.2m +32% +19% Margin* 10.6% 12.6% +250 bps +200 bps ⁺ Organic measures are at constant currency and exclude contributions from
Slide 20: Watson-Marlow
Watson-Marlow 30th June 2020 Exchange Organic 30th June 2021 Organic⁺ Reported Sales £149.1m (£5.9m) £49.7m £192.9m +35% +29% Operating profit* £48.6m (£1.4m) £24.1m £71.3m +51% +47% Margin* 32.6% 37.0% +400 bps +440 bps ⁺ Organic measures are at constant currency and exclude contributions from acqu
Slide 21: Living our purpose in 2021
Living our purpose in 2021 Engineering a more efficient, safer and sustainable world Read more: customer case studies can be found in the Appendix 20 2021 Half Year Results Six months ended 30th June 2021 Efficient, Safer, Sustainable
Slide 22: Summary and outlook
Summary and outlook • Revenue up 13%; organically up 17% • Operating profit up 37%; organically up 42% • Operating margin 25.3%; up 440 bps organically • Excellent execution and operating leverage enabled record margin • Strong first half performance improves full year outlook • FX headwind of less
Slide 23: 2021 Half Year Results
2021 Half Year Results Six months ended 30th June 2021 Nicholas Anderson (Group Chief Executive) Nimesh Patel (Chief Financial Officer) Efficient 22 2021 Half Year Results Six months ended 30th June 2021 Safer Sustainable Efficient, Safer, Sustainable
Slide 24: Appendices
Appendices 23 2021 Half Year Results Six months ended 30th June 2021 Efficient, Safer, Sustainable
Slide 25: Appendix I: Case Studies
Appendix I: Case Studies Engineering a more efficient, safer and sustainable world 24 2021 Half Year Results Six months ended 30th June 2021 Efficient, Safer, Sustainable
Slide 26: More efficient pumping processes
1. More efficient pumping processes Watson-Marlow’s pumps eliminate downtime, saving Dutch bakery customer’s dough Watson-Marlow’s Certa Sine pumps were picked by a Dutch bakery ingredients manufacturer for their gentle pumping action which transfers highly viscous marinades, dough improvers and rel
Slide 27: Safe and reliable steam quality
2. Safe and reliable steam quality Spirax Sarco clean steam generators helps hospital maintain safe and sterile conditions Spirax Sarco’s clean steam generators were selected by Ramathibodi Hospital in Thailand which required a quick, easy and effective way to sterilise equipment and surfaces, whils
Slide 28: Heating solutions that are good for the planet
3. Heating solutions that are good for the planet Chromalox supports power generation technology provider switch to zero emission heating system Chromalox’s DirectConnect™ heating system, which uses medium voltage technology, was chosen by a power generation technology provider who wanted to decarbo
Slide 29: Appendix II: Cash conversion
Appendix II Cash conversion Pounds (£) million 30th June 2021 30th June 2020 Adjusted cash generated from operations 139.1 102.2 Adjusted Operating Profit* 162.9 119.0 Cash conversion 85% 86% * See Appendix V for definition of profit measures. 28 2021 Half Year Results Six months ended 30th June 202
Slide 30: Appendix III: Currencies
Appendix III Currencies Average exchange rates 30th June 2020 30th June 2021 % 2020 % US dollar 1.27 1.38 -9% 1.29 -7% Euro 1.15 1.15 - 1.13 -2% RMB 8.94 8.96 - 8.93 - Won 1,531 1,546 -1% 1,524 -1% Brazilian real 6.21 7.42 -19% 6.67 -11% Argentine peso 82.01 125.98 -54% 91.65 -37% 29 2021 Half Year
Slide 31: Appendix IV: First half profit measures
Appendix IV 2021 note on first half 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 understand
Slide 32: Appendix V: Current guidance
Appendix V Current guidance 2020 Actual 2021 Estimate Capex (as a percentage of sales) 4% c. 5%-6% Effective Tax Rate 27.5% c. 27% Net Finance Cost £8.7m c. £7.5m Net impact of acquisitions and disposals on revenue +1% - Net impact of acquisitions and disposals on adjusted operating profit +1% - For
Slide 33: Appendix VI: additional ESG information
Appendix VI: additional ESG information Engineering a more efficient, safer and sustainable world Informed by a robust One Planet will guide our operations as we work materiality assessment with others to leave a better world for tomorrow 32 2021 Half Year Results Six months ended 30th June 2021 Eff
Slide 34: Our sustainability initiatives
1. Our sustainability initiatives ACHIEVE NET ZERO GREENHOUSE GAS EMISSIONS DELIVER BIODIVERSITY NET GAIN IMPLEMENT ENVIRONMENTAL IMPROVEMENTS IN OUR OWN OPERATIONS Absolute Emissions Reductions (%) Zero solvent-based paints 100 2023: 2025: 15% 50% 50 2030: 100%ᶧ Protect and restore 15% reduction in
Slide 35: Our sustainability initiatives (continued)
2. Our sustainability initiatives (continued) GROW SALES OF PRODUCTS WITH QUANTIFIED RAISE SUSTAINABILITY STANDARDS ACROSS SUPPORT THE WELLBEING OF OUR COMMUNITIES SUSTAINABILITY BENEFITS OUR SUPPLY CHAIN Quantify whole life cycle carbon Reduce our carbon footprint 25% reduction in footprint & susta
Slide 36: People and community
3. People and community Health and Safety Inclusion and Diversity Our strategic partnerships Approach & commitment Approach & commitment We strive for excellence in Health & Safety and Our plan for an inclusive, equitable and Signatory of Change the have a target of zero accidents across the Group h
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