Enhancing Productivity. Spectris plc Interim Results. 30 July Spectris plc

Transcription

1 Enhancing Productivity Spectris plc 2015 Interim Results 30 July 2015

2 Agenda Highlights Financial Performance Business Update Summary and Outlook 2

3 Highlights Constant currency sales growth of 5%, with acquisitions contributing 4% points LFL sales growth of 1%, with 4% growth in Materials Analysis offset by an average decline of 1% across the other three segments Adjusted EPS declined by 3%, interim dividend increased by 8% Robust operating cash conversion of 85% 3

4 Financial Performance Clive Watson Group Finance Director 4

5 Financial Performance Change Change at CER (2) Like-for-like change (3) Sales ( m) % +5% +1% Adjusted operating profit ( m) (1) % -2% -8% Adjusted return on sales (%) (1) pp Adjusted profit before tax ( m) (1) % Adjusted tax rate (%) (1) pp Adjusted earnings per share (pence) (1) % Dividend (pence) % Adjusted operating cash flow ( m) (1) % Cash conversion (%) (1) pp Notes (1) The adjusted performance measures represent the statutory results excluding certain non-operational items. (2) At constant exchange rates. (3) At constant exchange rates and excluding acquisitions. 5

6 Sales m (3.2) Pricing 2.8m Volume/mix 0.9m Translation gain/(loss): USD 19.7m EUR (20.6)m Other (2.3)m 2014 Volume/ mix/ pricing Acquisitions Currency

7 Adjusted Operating Profit m (6.5) 4.2 (1.4) 67.4 Pricing 2.8m Vol/mix 0.9m MLO inflation (3.5)m Procurement savings 2.0m Other (1.2)m 2.7% LFL increase Personnel related Translation gain/(loss): USD 2.6m EUR (3.8)m Other (0.2)m 2014 Volume/ mix/ pricing/cogs SG&A Acquisitions Currency 2015 ROS 13.0% ROS 12.0% 7

8 Cash Flow m Operating cash flow = 57.3m ( 2014: 60.3m) EBITDA 79.3 Increase in working capital (10.1) Capex (11.9) Acquisitionrelated Dividend/ interest/ tax/other Net debt at 1 January 2015 (32.1) (48.3) Net debt at 30 June x dep n Current year acquisitions 30.1m Deferred consideration 0.3m Acquisitionrelated costs 1.7m Dividend 36.3m Tax 14.4m Net interest 2.2m Other inflows (4.6)m Net debt: EBITDA (125.6) 0.6x (148.7) 0.7x 8

9 Summary Segment Performance Materials Analysis Test and Measurement In-line Instrumentation Industrial Controls Total Sales ( m) LFL sales growth 4% -5% - 5% -1% 3% -1% 4% 1% 1% Adjusted operating profit ( m) Return on sales 8.8% 8.7% 11.4% 12.1% 11.4% 14.1% 18.0% 19.0% 12.0% 13.0% After sales as % of sales 33% 32% 20% 20% 44% 44% 1% 1% 25% 25% 9

10 Foreign Exchange and Cost Reduction Measures Major foreign exchange translation sensitivities: Full year 2015 impact of 1 cent change versus GBP: Sales m Operating profit m Euro USD Cost reduction measures: 2015 m H m est. FY 2015 m est. Annualised m est. Costs (1.2) (5) (6) - Benefits Net (cost)/benefit (0.4) (3) (3) 6 10

11 Further FY 2015 Considerations Full year benefit from acquisitions: Sales c. 35m, Operating profit c. 6-7m Full year net interest costs: c. 5m Full year effective tax rate: c. 23% Full year capital expenditure: c. 25m Continued robust operating cash conversion Currently anticipate full year adjusted operating profit to be around the low end of market expectations (1), before impact of foreign exchange translation in H2 (1) Company-compiled range of analyst forecasts for adjusted operating profit: 200.0m m. 11

12 Business Update John O Higgins Chief Executive 12

13 Business Segments Laboratory / off-line businesses Process / manufacturing businesses Materials Analysis Test and Measurement In-line Instrumentation Industrial Controls Metals/minerals/mining Automotive Process industries Manufacturing Pharma/fine chemicals Aerospace Pulp, paper & tissue Process industries Academic research Electronics Energy & utilities Energy Semiconductors Energy Web/converting Electronics Academic research Healthcare Zetium X-ray spectrometer PMX data acquisition system MiniLaser gas analyser Vision MINI smart camera % Group Sales 2015: 30% 29% 21% 20% 13

14 Sales by Destination 2015 sales by destination Region / country 2015 m Change vs % LFL change % Asia Pacific % 1% Asia Pacific ROW 6% Europe China Japan % -8% -4% -5% 28% 31% North America % -2% 35% North America Europe % 4% Germany % 1% Rest of the world % -2% Group % 1% 14

15 Materials Analysis Continued good growth in pharmaceutical sector Return to growth in metals and minerals; mining demand remains subdued Lower sales to academic research sector, which remains constrained by fiscal pressures Good contribution from prior-year acquisitions, with additional distributor acquired in Operating margins impacted by the annualised effect of prior-year headcount increases and the absence of a one-off R&D grant that benefitted the prior-year period % change vs 2014 Organic FX Acq. Reported LFL Sales (2.2) % 4% Adjusted Op Profit 13.2 (1.3) (0.1) % -10% Return on sales 8.7% 8.8% 0.1pp -1.1pp 15

16 Test and Measurement Slight decline in automotive sector following strong prior-year period Increased sales to aerospace market despite economic sanctions on Russia Lower sales to consumer electronics market following large orders in prior-year period Strong growth in engineering software and environmental noise monitoring services Challenging near-term conditions for microseismic monitoring, but making good progress expanding our technology offering and geographic presence in this market Operating margin reduction reflects negative operating leverage % change vs 2014 Organic FX Acq. Reported LFL Sales (7.2) % - Adjusted Op Profit 19.4 (1.1) (1.0) % -6% Return on sales 12.1% 11.4% -0.7pp -0.7pp 16

17 In-line Instrumentation Good growth in energy & utilities from downstream petrochemical and wind energy markets, supported by new products and customer base expansion Slight decline in pulp and paper, with continued growth in pulp and tissue applications offset by over-capacity in coated paperboard and graphic paper markets, particularly in China Decline in sales to the web and converting industries, reflecting fewer large orders versus prior-year period and weaker demand across Europe Operating margin reduction reflects negative operating leverage % change vs 2014 Organic FX Acq. Reported LFL Sales (0.6) (1.6) % -1% Adjusted Op Profit 17.3 (1.6) (1.9) % -9% Return on sales 14.1% 11.4% -2.7pp -1.2pp 17

18 Industrial Controls Sales decline reflects broad-based slowdown in US industrial demand Geographic expansion of Omega delivering good results, particularly in Asia Enhancements to Omega s digital marketing, product portfolio and business infrastructure Lower demand for HMI products due to weakness in US oil and gas market Lower operating margin reflects negative operating leverage & ERP-related costs at Omega % change vs 2014 Organic FX Acq. Reported LFL Sales (1.6) % -1% Adjusted Op Profit 20.2 (1.5) % -7% Return on sales 19.0% 18.0% -1.0pp -1.2pp 18

19 Strategy Wheel Innovative customer solutions Increase presence in key strategic markets Deploy capital for M&A Expand business globally Accelerate operational excellence 19

20 Strategic Progress in Customer solutions: Zetium X-ray spectrometer Innovative customer solutions Increase presence in key strategic markets Strategic markets: Life science Deploy capital for M&A Expand business globally Deploy capital for M&A Accelerate operational excellence Expand globally Operational excellence Strong sales growth Opened new offices Major contract wins 20

21 Summary and Outlook Good contribution from acquisitions in, Group LFL sales growth of 1% impacted by weak trading conditions in China and the US New product launches and acquisitions expected to benefit H2 performance Cost reduction measures in place to improve future profitability Our broad end-market exposures, continuing investments in new products, strong cash flow and robust financial position underpin the Board s view that the company is well positioned to deliver on its growth strategy 21

22 Enhancing Productivity Spectris plc Q&A 22