Half Year 2024 Spirax Group PLC Earnings Call Transcript
Key Points
- Spirax Group PLC (SPXSY) reported a 2.7% organic sales growth excluding China, outperforming global industrial production growth of 0.8%.
- The ETS division saw a 5% organic sales growth, driven by strong demand for electrification solutions and operational improvements.
- Watson-Marlow experienced a 3% organic sales growth, with early signs of improvement in Biopharm demand.
- The company declared an interim dividend increase of 3%, reflecting confidence in future growth.
- Spirax Group PLC (SPXSY) is investing in future growth drivers, including a EUR4 million investment in a high-temperature heat pump technology startup in Germany.
- Overall group organic sales growth was only 1.3%, impacted by a weaker macroeconomic environment, particularly in China.
- The STS division, heavily reliant on China, saw a decline in sales and margins due to reduced demand for large projects.
- Currency movements posed a significant headwind, with reported sales down 3% and adjusted operating profit down 6%.
- The adjusted operating profit margin decreased to 19.4%, down from the previous year.
- Net financing costs increased due to higher market interest rates, impacting profitability.
Good morning, and welcome to our 2024-first-half results presentation. I'm Nimesh Patel, Chief Executive of Spirax Group. And I'm joined today by Phil Scott, our Interim Chief Financial Officer. And also in the audience is Louisa Burdett, who joined the group in July to be our new Chief Financial Officer.
The first half of this year has been more challenging than we had anticipated. Our financial results are slightly below our plans. And we have taken a more cautious view for the remainder of 2024. Overall, group organic sales growth was 1.3%, reflecting a weaker macroeconomic environment in key markets in the first half, particularly in China.
Estimates for industrial production growth in China vary significantly across different forecast providers, and they've changed materially and often. Therefore, we focused on global IP, excluding China, which in the first half was up 0.8%. This compares to our group organic sales growth, excluding China, of 2.7%, so well ahead of IP.
In STS, where China represents nearly 20%
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