> ENGINEERING SUSTAINABLE VALUE > 2017 HALF YEAR RESULTS Six months ended 30th June 2017 Bill Whiteley – Chairman Nicholas Anderson – Chief Executive Kevin Boyd – Group Finance Director Vicky Ming, Training Executive, Technical Sustainability Department, in Spirax Sarco’s Steam Training Centre, China 0 2017 Half Year Results Six months ended 30th June 2017
Agenda 2017 H1 Highlights 2017 H1 Financial Review Operations and Outlook Bill Whiteley Appendices Nicholas Anderson Kevin Boyd > ENGINEERING SUSTAINABLE VALUE 1 2017 Half Year Results Six months ended 30th June 2017 >
2017 First half year highlights 30 th June 30 th June 2017 2016 £428.6m £344.0m Reported sales +5% +5% Organic sales growth ⁺ 23.6% 22.5% Operating profit margin* 95.5p 73.1p EPS* 25.5p 22.5p DPS ⁺ Organic measures are at constant currency and exclude acquisitions and disposals. * See Appendix III for definition of adjusted profit measures. Organic sales growth of 5% • Adjusted operating profit up 31% • Adjusted operating margin increased 110 bps • Good growth in both the Steam Specialties and Watson-Marlow businesses • Acquisition of Gestra (2 nd May) and Chromalox (post half-year end) • > Dividend growth of 13% • ENGINEERING SUSTAINABLE VALUE 2 2017 Half Year Results Six months ended 30th June 2017 >
Kevin Boyd 2017 H1 Financial Review > ENGINEERING SUSTAINABLE VALUE 3 2017 Half Year Results Six months ended 30th June 2017 >
Financial performance 30 th June 30 th June Constant • Organic sales +5% 2017 2016 Reported currency Organic ⁺ • Organic sales Revenue £428.6m £344.0m +25% +13% +5% growth in EMEA and Asia Pac of the Operating profit* £101.2m £77.5m +31% +13% +8% Steam Specialties Operating profit margin* 23.6% 22.5% +110 bps +10 bps +50 bps business, flat in the Americas. Good Net finance expense (£2.0m) (£1.3m) organic growth in Pre-tax profit* £99.2m £76.2m +30% Watson-Marlow Tax rate* 29.1% 29.6% -50 bps • Operating profit +8% on an organic EPS* 95.5p 73.1p +31% basis DPS 25.5p 22.5p +13% • Small decrease in tax rate ⁺ Organic measures are at constant currency and exclude acquisitions and disposals. • EPS +31% * See Appendix III for definition of adjusted profit measures. > ENGINEERING SUSTAINABLE VALUE 4 2017 Half Year Results Six months ended 30th June 2017 >
Sales bridge Increase in sales 440 500 • Currency gain of 9.1 10% 450 6.2 0.2 420 428.6 5.2 • Total organic* 27.8 400 growth of 5%; Steam Specialties 400 350 Sales £m +4%, Watson- 36.1 Marlow +9% 300 380 • Acquisitions add 7% 250 360 200 150 340 344.0 100 320 50 ⁺ Organic measures are at 300 0 constant currency and exclude H1 2016 FX M&A EMEA AsiaPac Americas WMFTG H1 2017 acquisitions > ENGINEERING SUSTAINABLE VALUE 5 2017 Half Year Results Six months ended 30th June 2017 >
Profit bridge Increase in adjusted operating profit 105 120 • Adjusted operating -1.5 4.2 0.4 profit* +31% 0.7 100 100 • Currency impact 101.2 2.9 +16% 4.9 95 80 • Organic increase Profit £m +8% 12.1 90 60 • Acquisitions add 5% • Americas down due 85 40 to non-recurrence of Argentine 80 20 currency devaluation benefit 77.5 75 0 70 -20 * See Appendix III for definition of adjusted profit H1 2016 FX M&A EMEA AsiaPac AmericasWMFTG Central H1 2017 measures > ENGINEERING SUSTAINABLE VALUE 6 2017 Half Year Results Six months ended 30th June 2017 >
Record H1 operating profit margin of 23.6% 25% • Operating margin* +110 bps ahead in Steam Specialties 20% business • Operating margin -150 bps in Watson- 15% Marlow as we invest for growth 23.6% • Record H1 margin, 10% despite dilutionary impact of acquisitions 5% 15.8% 17.1% 17.1% 17.0% 15.0% 19.5% 19.3% 21.0% 19.9% 21.3% 18.6% 22.4% 20.6% 23.3% 21.0% 23.9% 20.6% 24.9% 22.5% 24.9% 0% * See Appendix III for 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 definition of adjusted profit measures H1 H2 > ENGINEERING SUSTAINABLE VALUE 7 2017 Half Year Results Six months ended 30th June 2017 >
Currency movements FX translation impact on sales 2015-2017 Actual Projected 105 8% full year translation impact on sales 10% half year 100 translation impact on sales 5% projected full year translation 95 impact on sales 90 85 80 H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 H2 2017 > Yearly average exchange rate Based on Spirax Sarco sales-weighted currency translation index ENGINEERING SUSTAINABLE VALUE 8 2017 Half Year Results Six months ended 30th June 2017 >
Adjusted cash flow 30 th June 30 th June Pounds (£) million 2017 2016 Adjusted operating profit* 101.2 77.5 • 84% cash Depreciation and amortisation 14.0 12.6 conversion Adjusted earnings before interest, tax, depreciation and amortisation 115.2 90.1 Cash payments to the pension schemes less than the charge to operating profit 2.1 0.1 • Net debt at 30 th June 2017 of Share plans/provisions 1.7 3.9 £113.8 million Working capital changes (19.5) (5.1) Net capital expenditure (including software and development) (14.6) (16.8) • Acquisition of Cash from operations 84.9 72.2 Gestra in May 2017 Net interest (0.3) 0.1 Income taxes paid (25.8) (27.3) Free cash flow 58.8 45.0 Net dividends paid (39.4) (35.5) Proceeds from issue of shares 0.6 1.0 Acquisitions (including costs) (158.0) (0.1) Cash flow for the period (138.0) 10.4 Exchange movements (3.2) 5.4 * See Appendix III for Opening net cash 27.4 4.8 definition of adjusted profit Closing net (debt)/cash at 30 th June measures (113.8) 20.6 > ENGINEERING SUSTAINABLE VALUE 9 2017 Half Year Results Six months ended 30th June 2017 >
Operating margin factors Indicative effects on operating margins* H1 2017 H2 2017 Currency movements Operating leverage Sales pricing (vs. inflation) Material prices Manufacturing strategies Business & product mix Business development investment Acquisitions * The arrows as shown are qualitative and indicate direction only H1 2017 and H2 2017 arrows are an indication versus H1 and H2 2016 respectively > ENGINEERING SUSTAINABLE VALUE 10 2017 Half Year Results Six months ended 30th June 2017 >
Nicholas Anderson Operations and Outlook > ENGINEERING SUSTAINABLE VALUE 11 2017 Half Year Results Six months ended 30th June 2017 >
Annual IP growth rates by quarter 2012-2017 Forecast Actual 6.0% Developed (OECD) Emerging (Non-OECD) Global 5.0% 4.0% 3.3% 3.0% 2.0% 1.7% 1.0% 0.5% 0.0% H1/16 ≈ 0.0% -1.0% -2.0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2012 2016 2013 2014 2015 2017 > ENGINEERING Source: CHR Economics – July 2017 SUSTAINABLE VALUE 12 2017 Half Year Results Six months ended 30th June 2017 >
Europe, Middle East and Africa (EMEA) 30 th June 30 th June 2016 2017 Organic ⁺ Reported Exchange Organic Acquisition Sales £112.1m £137.9m +4% +23% £9.8m £5.2m £10.8m Op profit* £23.1m £30.4m +11% +32% £2.6m £2.9m £1.8m Margin* 20.6% 22.0% +140 bps +140 bps ⁺ Organic measures are at constant currency and exclude acquisitions and disposals. * See Appendix III for definition of adjusted profit measures. • Organic sales up 4%; organic operating profit up 11% • Strong currency tailwind: sales up 9%, profit up 11% • Strong sales growth in the UK, Italy and France Gestra acquisition (2 nd May) adds 9% to sales, 7% to profit • Operating margin ahead 140 bps, good manufacturing efficiencies • 32% • Well placed for further progress in 2017 of Group sales > ENGINEERING SUSTAINABLE VALUE 13 2017 Half Year Results Six months ended 30th June 2017 >
Asia Pacific 30 th June 30 th June 2016 2017 Organic ⁺ Reported Exchange Organic Acquisition Sales £82.0m £97.9m +7% +19% £9.2m £6.2m £0.5m Op profit* £18.1m £25.0m +20% +38% £2.7m £4.2m £0.0m Margin* 22.0% 25.5% +290 bps +350 bps ⁺ Organic measures are at constant currency and exclude acquisitions and disposals. * See Appendix III for definition of adjusted profit measures. • Organic sales up 7%, organic operating profit up 20% • Strong currency tailwind: sales up 11%, profit up 15% • China, Korea and Japan performed strongly • India performing in line with expectations Exceptional organic profit growth; favourable project mix • 23% • Expect good progress in 2017, despite relative H2 slowdown of Group sales > ENGINEERING SUSTAINABLE VALUE 14 2017 Half Year Results Six months ended 30th June 2017 >
Recommend
More recommend
