Full Year 2022 Spirax-Sarco Engineering PLC Earnings Call Transcript
Key Points
- Spirax Group PLC (SPXSF) achieved 14% organic sales growth in 2022, driven by volume growth and price increases.
- All three business segments outperformed their markets, exiting the year with record-high order books.
- The company completed strategic acquisitions, including Vulcanic and Durex Industries, which are expected to enhance long-term growth prospects.
- Watson-Marlow segment saw a strong 16% organic sales growth, with significant contributions from the pharmaceutical and biotechnology sectors.
- The adjusted operating profit margin of 23.6% in 2022 is comparable to the highest margins in the company's history, excluding the exceptional 2021 margin.
- Global industrial production growth weakened significantly, impacting overall market conditions.
- Cash flow conversion was lower at 57%, driven by record capital expenditures and inventory rebuilding.
- The effective tax rate remained high at 25%, with expectations of a marginal increase in 2023.
- The company faced significant cost inflation in raw materials, energy, and freight, which required proactive price management to mitigate.
- Watson-Marlow's adjusted operating profit margin declined by 390 basis points due to the full-year impact of 2021 revenue investments and costs associated with new facility transitions.
Okay. Good morning, everyone, and welcome to our 2022 results announcement call. I'm Nicholas Anderson, Group Chief Executive, and I'm joined here by our CFO, Nimesh Patel. Consistent with the format that we followed in the past years, I will start by sharing the 2022 highlights and then Nimesh will take you through our financial performance. I will come back later to cover the operations in 2022 and our outlook for 2023.
To finalize, we will be happy to take questions from the analysts joining us here today. So a war in Europe, global supply chain disruptions, COVID related economic slowdown in China, rising energy prices and heightened inflationary precious turned 2022 into a very challenging year.
Global industrial production growth or IP weakened significantly from a very strong 7.7% expansion in 2021 to 2.7% growth in 2022, which is materially lower than forecasted 1 year ago. Against this very challenging backdrop, we achieved 14% organic sales growth driven by volume growth well
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