2011 Half Year Results 30 th June 2011

Transcription

1 2011 Half Year Results 30 th June 2011 Mark Vernon Chief Executive David Meredith Finance Director

2 Overview of Half Year 2011 results Change Constant currency Revenue 307.7m 277.0m +11% +11% Operating profit* 61.2m 53.5m +14% +14% Margin* 19.9% 19.3% +60 bps Pre-tax profit* 63.0m 54.9m +15% +15% EPS* 56.6p 49.8p +14% +14% DPS 14.8p 13.0p +14% Record sales up 11% (10% organic) growth in all segments Operating profit margin improved to 19.9% Pre-tax profit up 15% Completed equipment relocations for Cheltenham manufacturing site consolidation High first-half capital expenditure ( 20 million) Strong balance sheet * See Appendix V for definition of profit measures 2011 Half Year Results 30 June

3 Segment revenue changes Asia Watson- EMEA Pacific Americas Marlow FX Sales 2011 m +8% +12% +11% +17% +0% EMEA Asia Pac Americas WM Total m 9.0m 7.2m 6.3m 7.9m Organic sales increase over 2010 Steam Specialties +8% Watson-Marlow +17% Based on sales at constant currency 0.3m % Chg yoy over 2010 Organic Sales +10% Acquisitions +1% FX +0% TOTAL +11% 2011 Half Year Results 30 June

4 Segment operating profit changes Asia Watson- EMEA Pacific Americas Marlow FX Profit 2011 m +8% +14% +20% +19% +0% EMEA Asia Pac m Americas WM Corp Exp Total m 1.5m 1.9m 2.1m Mexico 0.2m Based on adjusted profit at constant currency - see Appendix V % Chg yoy over 2010 Operating profit +14% Op margin % Op margin % 2011 Half Year Results 30 June

5 Financial aspects Change Constant currency Revenue 307.7m 277.0m +11% +11% Operating profit* 61.2m 53.5m +14% +14% Margin* 19.9% 19.3% +60 bps +50 bps Net finance income 0.6m ( 0.4m) Associates 1.3m 1.8m -28% -26% Pre-tax profit* 63.0m 54.9m +15% +15% Tax rate (excluding Associates)* 31.1% 31.4% EPS* 56.6p 49.8p +14% +14% DPS 14.8p 13.0p +14% Record first half operating profit margin Improved finance income DB pensions Tax rate marginally lower FX immaterial * See Appendix V for definition of profit measures 2011 Half Year Results 30 June

6 Operating profit margin Trend improvement Key H1 H2 * See Appendix V for definition of profit measures 2011 Half Year Results 30 June

7 Cash flow ( millions) Working capital outflow sales growth, higher stocks and seasonal pattern High capex over 20m 5m increase in dividend payments Closing net cash 12m Adjusted operating profit* Depreciation and share schemes Working capital (28.1) (3.9) Adjusted cash from operations Capital expenditure (net including Development) (20.8) (11.9) Interest paid (0.1) (0.3) Tax paid (18.7) (14.9) Free cash flow Dividends paid (net) (23.3) (18.0) Special pension payments/severance/provisions (4.0) (3.7) Shares issues/purchased (net) Acquisitions (3.1) (2.5) Cash flow for the period (23.6) 11.9 Net cash balance * See Appendix V for definition of profit measures 2011 Half Year Results 30 June

8 Key performance indicators App I EPS / DPS App II ROCE App III Cash conversion App IV FX App V Adjusted profit Organic sales growth +10% +6% Operating profit margin* 19.9% 19.3% Return on capital employed (average)* 41.0% 39.2% Sales per employee +4% +9% Cash conversion* 38% 89% Working capital to sales 28.2% 24.9% Good organic sales growth Record first half operating profit margin Improved return on capital employed Lower cash conversion working capital and high capex Higher working capital to sales FX, increased raw materials and buffer stocks * See Appendix V for definition of profit measures 2011 Half Year Results 30 June

9 Underlying operating margin factors (Effects on margin) 2010 YR 2011 H1 Currency movements Volume leverage Sales pricing (above inflation) Higher impacts Material prices Manufacturing strategies Mix Business development investment Lower impacts 2011 Half Year Results 30 June

10 Europe, Middle East & Africa (EMEA) Change Constant currency Sales 122.7m 112.8m +9% +8% Operating profit* 20.5m 18.6m +10% +8% Margin* 16.7% 16.5% Two-speed recovery Sales strongly ahead in emerging Europe, Middle East and Africa Good growth in Germany Continued difficult conditions in France, Italy and Spain Physical moves completed in Cheltenham manufacturing site consolidation Lower profits in manufacturing operations *Based on adjusted Operating profit see Appendix V 2011 Half Year Results 30 June

11 Asia Pacific Change Constant currency Sales 65.2m 56.7m +15% +12% Operating profit* 15.6m 13.1m +19% +14% Margin* 23.9% 23.0% Good growth in nearly all product lines Strong progress in China continued expansion of sales network New manufacturing plant in Shanghai performing well output accelerating Korean sales and profits ahead Good results from smaller operations in region Remarkable performance in our small Japanese operation Modest FX gains strong Australian dollar *Based on adjusted Operating profit see Appendix V 2011 Half Year Results 30 June

12 Americas Change Constant currency Sales 63.9m 59.0m +8% +11% Operating profit* 12.6m 10.9m +15% +20% Margin* 19.7% 18.5% Good sales growth half from Mexico North American market conditions normalised higher project activity in Canada Higher sales in USA good flow metering projects Good sales and profit growth in Latin America Results boosted by consolidation of Mexico Improved operating profit margin higher sales, cost controls, Mexico and Brazil *Based on adjusted Operating profit see Appendix V 2011 Half Year Results 30 June

13 Watson-Marlow Pumps Change Constant currency Sales 55.9m 48.5m +15% +17% Operating profit* 16.1m 14.0m +15% +19% Margin* 28.8% 28.8% Widespread sales growth Continued expansion of geographic coverage and sector-focused sales resource Further integration and development of recent acquisitions Strong growth in emerging markets Strong sales in industrial and mining markets but weaker in water & wastewater FX headwind weaker US dollar impacted margin *Based on adjusted Operating profit see Appendix V 2011 Half Year Results 30 June

14 Segmental revenue changes Asia Pacific rises in first half 2011 EMEA 40% (2010: 41%) Americas 21% (2010: 21%) Asia Pacific 21% (2010: 20%) Good geographic spread Diverse industry and customer base 1,300 direct sales and service engineers in over 50 countries Watson-Marlow Pumps 18% (2010: 18%) Sales are by geographical location of operations 2011 Half Year Results 30 June

15 Group geographic revenues - Good emerging market exposure Americas 28% (2001: 23%) Emerging markets 10% (2001: 5%) EMEA 48% (2001: 59%) Emerging markets 9% (2001: 5%) Asia Pacific 24% (2001: 18%) Emerging markets 19% (2001: 12%) CAGR CAGR CAGR % 15% 10% 5% 0% 6% 14% Developed Emerging 20% 15% 10% 5% 0% 3% 13% Developed Emerging 20% 15% 10% 5% 0% 4% 11% Developed Emerging Sales are by geographical location of operations 2011 Half Year Results 30 June

16 Summary Market conditions improved in the first half Sales growth of 11% - well spread across all segments Record first half operating profit and margin Manufacturing site consolidation in Cheltenham physical moves complete Continued investment in sales development and new product development Strong balance sheet net cash 12m Interim dividend up 14% confidence in prospects Increasingly alert to the impacts on global economy and industrial production from uncertainty in financial markets, high debt levels and government finances 2011 Half Year Results 30 June

17 Spirax-Sarco Engineering plc 2011 Half Year Results 30 th June Focused on consistent growth and creating shareholder value 2011 Half Year Results 30 June

18 Appendix I - Investing for long term delivers results 43 year dividend record Key EPS Special dividend DPS Final DPS Interim Pence per share *Based on adjusted Operating Profit see Appendix V. From 2004 figures prepared under IFRS 2011 Half Year Results 30 June

19 Appendix II - Return on capital employed m Capital Employed Property, plant & equipment Inventories Trade receivables Prepayments, other current assets Trade, other payables & current tax (97.6) (91.4) Total Capital Employed Average Capital Employed Adjusted Operating Profit Last Twelve Months First half year Prior year second half year Adjusted Operating Profit* ROCE* 41.0% 39.2% * See Appendix V for definition of profit measures 2011 Half Year Results 30 June

20 Appendix III - Cash conversion m Adjusted cash generated from operations Net capital expenditure** (20.8) (11.9) Net cash flow (before interest, tax, dividends etc) Adjusted Operating Profit* Cash conversion 38% 89% See Appendix V for definition of profit measures ** Property, plant, equipment, software and development 2011 Half Year Results 30 June

21 Appendix IV - Currencies FX movements overall immaterial to profit in first half 2011 weaker dollar matched by gains elsewhere Average exchange rates 2011 H H1 H1 change % 2010 Year Bank of England sterling index % 80.2 US$ % 1.55 Euro % 1.17 RMB % Won 1,778 1,785 0% 1,798 Period end exchange rates Bank of England sterling index % 79.8 US$ % 1.57 Euro % 1.17 RMB % Won 1,714 1,828 +7% 1, Half Year Results 30 June

22 Appendix V Note on profit measures All profit measures exclude the amortisation of acquisition-related intangible assets of 2.2m (2010: 1.6m) of which 0.2m (2010: 0.2m) relates to Associates excludes the gain of 8.2m on revaluation of investment of a company previously treated as an Associate, net of professional costs of 0.2m in relation to acquisitions Half Year Results 30 June