Half Year 2021 Spirax-Sarco Engineering PLC Earnings Call Transcript
Key Points
- Strong organic sales growth of 17% in the first half of 2021, driven by robust demand across all three business segments.
- Operating profit increased by 37%, with a record operating profit margin of 25.3%, reflecting excellent execution and cost management.
- Watson-Marlow business achieved exceptional organic sales growth of 35%, driven by high demand in the pharmaceutical and biotechnology sectors.
- Continued strong working capital management practices delivered good cash flow performance while supporting sales without compromising on capital investments.
- Launch of the comprehensive One Planet sustainability strategy, which aligns with the UN Sustainable Development Goals and aims to achieve net-zero greenhouse gas emissions by 2030.
- Currency headwinds negatively impacted sales and operating profit, with a 4% adverse impact on sales and more than 4% on operating profits.
- Increased revenue investments in the second half are expected to offset the positive operational gearing effect, leading to a flat margin in H2.
- Demand for larger projects, typically driven by customers' capital expenditure budgets, remained below pre-pandemic levels.
- Challenges in managing the expansion of capacity to meet the strong demand without incurring higher costs that could impact margins.
- Potential uncertainties in the global industrial production forecast due to the evolving COVID-19 pandemic, uneven vaccination rates, and varied economic responses by different governments.
Hello, and welcome to the Spirax-Sarco Engineering 2021 Half Year Results Call. My name is Jess, and I'll be your coordinator for today's event. (Operator Instructions)
I will now hand you over to your host, Nicholas Anderson, Group Chief Executive, to begin today's call.
Good morning, everyone, and welcome to our 2021 half year results announcement call. I'm Nicholas Anderson, Group Chief Executive, and I'm joined here today by our CFO, Nimesh Patel. Regarding today's presentation, I will start by sharing the highlights of the first half and then Nimesh will take you through our financial performance. Later, I will return to cover the operations and outlook for the full year 2021. To finalize, we'd be happy to take questions from the analysts on the call.
Moving now to Slide 2. The outstanding efforts and contributions of all our employees worldwide were of pivotal importance to continue serving our customers during these unprecedented times,
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