Spirax Group (SPX) H1 2024 earnings summary

Executive summary

• Organic sales grew 1%–1.3% in H1 2024, with reported sales down 3% due to currency headwinds and weaker demand in China; excluding China, organic growth was 3% and ahead of global industrial production.

• Adjusted operating profit margin declined to 19.4% from 20.2% year-over-year, impacted by adverse currency and sales mix; adjusted operating profit fell 6%–7%.

• Interim dividend increased by 3% to 47.5p per share, reflecting confidence in future growth.

• Leadership changes include new CFO, Board Chair, and MD ETS; strategic review underway to accelerate operational improvements and growth.

• Continued investment in growth, operational improvements, and sustainability, with a 9% reduction in Scope 1 and 2 emissions.

Financial highlights

• Reported revenue declined 3% to £827.0m; organic revenue up 1% year-over-year.

• Adjusted operating profit down 7% to £160.3m; organic decline of 1%; adjusted EPS down 12% to 137.2p.

• Net debt at £718m, 1.9x EBITDA; cash conversion improved to 53% in H1.

• Material currency headwinds reduced sales by 4% and adjusted operating profit by 6%.

• CapEx at 5%–6% of sales in H1, slightly below forecast due to project phasing.

Outlook and guidance

• Full-year organic revenue growth expected in the mid-single digits; adjusted operating margin to remain broadly in line with 2023 (currency adjusted 20.0%).

• Continued strong FX headwinds expected; cautious on scale of IP improvement in H2.

• STS: low-single digit organic growth, lower margins, and lower China contribution.

• ETS and Watson-Marlow expected to deliver mid-single digit organic revenue growth for the full year; Biopharm and Semicon recovery expected later in 2024.

• Full-year adjusted cash conversion anticipated at ~75%.