Spirax Group Plc. · LSE:SPX
Spirax — H1 2023 Earnings Presentation
30 slides from Spirax's earnings presentation, July 2023
Slide 1: 2023 Half Year Results
2023 Half Year Results …delivering for customers 2023 Half Year Results …including our colleagues …protecting the environment Six months ended Engineering 30th June 2023 our difference… Nicholas Anderson Group Chief Executive …creating …building stronger shareholder value communities Nimesh Patel Ch
Slide 2: Agenda
2023 Half Year Results 2 Agenda Half Year 2023 Highlights Nicholas Anderson Half Year 2023 Financial Review Nimesh Patel Operations and Outlook Nicholas Anderson
Slide 3: Half Year 2023 Highlights
2023 Half Year Results Half Year 2023 Highlights Nicholas Anderson
Slide 4: HY 2023 performance highlights
2023 Half Year Results 4 HY 2023 performance highlights • H1 performance broadly in line with expectations • Revenues grew 13% or 2% organically; excluding Biopharm, 11% organic growth • Strong growth in Steam Specialties and ETS offset by lower Biopharm sales in Watson-Marlow • Operating profit mar
Slide 5: HY 2023 operational highlights
2023 Half Year Results 5 HY 2023 operational highlights • ETS integration of Vulcanic and Durex Industries progressing very well • Completed Watson-Marlow and Durex Industries right-sizing; full benefits expected in H2 • Initiated US$58m expansion of Ogden facility; increasing capacity of Chromalox
Slide 6: Our ESG journey
2023 Half Year Results 6 Our ESG journey 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) *Target upd
Slide 7: Half Year 2023 Financial Review
2023 Half Year Results Half Year 2023 Financial Review Nimesh Patel
Slide 8: Financial summary
2023 Half Year Results 8 Financial summary • Revenue up 2% organically and 11% 30th June 2023 30th June 2022 Reported Organic⁺ excluding Biopharm Revenue £850.8m £750.1m 13% 2% Operating profit* £171.7m £178.8m (4)% (13)% • Operating profit down 13% organically Operating profit margin 20.2% 23.8% (3
Slide 9: Sales bridge
2023 Half Year Results 9 Sales bridge • Sales supported by price increases but volumes lower due to normalisation of Biopharm demand in Watson-Marlow – expected to recover in 2024 • Currency tailwind to sales of 1.5%; anticipate headwind for full year of between 2.0% and 2.5% • Total organic increas
Slide 10: Profit bridge
2023 Half Year Results 10 Profit bridge • Currency tailwind to profit of 1.7% • Total organic decrease of 13%: Steam Specialties +25% ETS (6)% Watson-Marlow (47)% • Right-sizing actions completed in Watson-Marlow and Durex Industries with full effect realised in H2 • Central expenses expected to be
Slide 11: Operating margin
2023 Half Year Results 11 Operating margin • Operating margin 20.2%, down 370 bps organically • Margin adversely impacted by operational gearing and lower sales in highest margin Businesses • Active price management continues to offset inflationary pressure • Anticipate full year operating margin de
Slide 12: Cash flow
2023 Half Year Results 12 Cash flow 30th June 2023 30th June 2022 • Cash conversion^ of 48%, slightly Cash flow (£ million) above H1 2022 - full year cash Adjusted operating profit* 171.7 178.8 conversion expected to be above Depreciation and amortisation (excluding IFRS 16) 21.7 17.0 70% Depreciati
Slide 13: Operations and Outlook
2023 Half Year Results Operations and Outlook Nicholas Anderson
Slide 14: Global Industrial Production
2023 Half Year Results 14 Global Industrial Production Annual growth rates by quarter
Slide 15: Steam Specialties
2023 Half Year Results 15 Steam Specialties Acquisitions & 30th June 2022 Exchange Organic disposals 30th June 2023 Organic⁺ Reported Sales £400.6m £0.6m £60.0m £(1.4)m £459.8m 15% 15% Operating profit* £92.1m £(2.2)m £22.4m £(0.1)m £112.2m 25% 22% Margin* 23.0% 24.4% 190 bps 140 bps ⁺ Organic measu
Slide 16: Electric Thermal Solutions
2023 Half Year Results 16 Electric Thermal Solutions Acquisitions & 30th June 2022 Exchange Organic disposals 30th June 2023 Organic⁺ Reported Sales £104.7m £4.4m £7.1m £76.3m £192.5m 7% 84% Operating profit* £12.8m £0.4m £(0.8)m £14.5m £26.9m (6)% 110% Margin* 12.2% 14.0% (140) bps 180 bps ⁺ Organi
Slide 17: Watson-Marlow
2023 Half Year Results 17 Watson-Marlow Acquisitions & 30th June 2022 Exchange Organic disposals 30th June 2023 Organic⁺ Reported Sales £244.8m £6.6m £(51.2)m £(1.7)m £198.5m (21)% (19)% Operating profit* £87.0m £4.8m £(42.9)m £48.9m (47)% (44)% Margin* 35.5% 24.6% (1,220) bps (1,090) bps ⁺ Organic
Slide 18: Biopharm demand – illustrative dynamics
2023 Half Year Results 18 Biopharm demand – illustrative dynamics • Underlying Biopharm end-market demand remains strong; anticipate continuing to grow at over 10% CAGR through COVID-19 cycle and beyond • Assuming actual COVID-19- related demand of around £100m, most customer destocking should occur
Slide 19: Engineering our difference
2023 Half Year Results 19 Engineering our difference 2023 customer case studies
Slide 20: Summary and Outlook
2023 Half Year Results 20 Summary and Outlook H1 2023 summary • First half performance broadly in line with expectations: stronger Steam Specialties sales offset by weaker Watson-Marlow and Durex Industries sales; 11% organic sales growth, excluding Biopharm • Operating profit and margin impacted by
Slide 21: 2023 Half Year Results
2023 Half Year Results 21 2023 Half Year Results For the six months ended 30th June 2023
Slide 22: Appendices
2023 Half Year Results 22 Appendices Engineering our difference
Slide 23: Appendix I: Case studies
2023 Half Year Results 23 Appendix I: Case studies Engineering our difference
Slide 24: Steam Specialties
2023 Half Year Results 24 Steam Specialties Zero carbon emissions Decarbonisation solutions in action Spirax Sarco, together with Chromalox, has deployed its revolutionary TargetZero technology to help Diageo, a multi national drinks company, towards its ambition to achieve net zero emissions (scope
Slide 25: Electric Thermal Solutions
2023 Half Year Results 25 Electric Thermal Solutions Zero emission energy sources for the future Mission-critical monitoring for Fusion Energy Fusion is the energy that powers our Sun and a promising long-term option to generate sustainable, non-carbon emitting energy in the future. ITER, the larges
Slide 26: Watson-Marlow
2023 Half Year Results 26 Watson-Marlow Reduced Water use and food waste Integral pumping for sustainable potato peeling Bredel hose pumps, part of Watson-Marlow, are contributing to a sustainable solution for steam potato peeling provided by TOMRA Food which reduces water usage, water treatment and
Slide 27: Appendix II: Currencies
2023 Half Year Results 27 Appendix II Currencies Average exchange rates Average half year 2023 Average half year 2022 Change US dollar 1.24_ 1.30 5%_ Euro 1.14_ 1.19 4%_ Renminbi 8.60 8.40 (2)% Won 1,606 1,593_ (1)% Brazilian real 6.26 6.63 6% Argentine peso 263.21 145.55 (81)%
Slide 28: Appendix III
2023 Half Year Results 28 Appendix III 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 user
Slide 29: Appendix IV: Cash conversion
2023 Half Year Results 29 Appendix IV Cash conversion (£ million) 30th June 2023 30th June 2022 Adjusted cash generated from operations 82.8 78.4 Adjusted operating profit* 171.7 178.8 Cash conversion 48% 44%_ * See Appendix III for definition of adjusted profit measures
Slide 30: Appendix V: Additional guidance
2023 Half Year Results 30 Appendix V Additional guidance (for modelling purposes) 2022 Actual 2022 Pro-forma 2023 Guidance Group Revenue £1,611m £1,734m Foreign exchange impact on revenue and profit favourable 4% n/a Adverse 2.0% - 2.5% Sales growth vs 2022 pro-forma 14% n/a 0.0% - 4.0% Corporate co