Spirax Group (SPX) H2 2024 earnings summary

Executive summary

• Achieved 4% organic sales growth year-over-year, outperforming global industrial production (IP) growth of 1.7%, with all three business segments delivering organic growth and stable margins despite challenging macroeconomic and currency conditions.

• Focused on operational priorities, margin protection, and advancing strategic initiatives, including restructuring, digital transformation, and organizational simplification to support long-term profitable growth.

• Decisive actions to drive efficiency resulted in higher cash conversion and reduced leverage, with targeted investments supporting future organic growth.

• Statutory operating profit increased 7% year-over-year, with margin up 140bps to 18.3%, while adjusted operating profit grew 4% organically but declined 4% reported due to currency impacts.

• A restructuring program initiated in 2025 is expected to deliver £35m annualized savings, funding future organic growth.

Financial highlights

• Organic revenue grew 4% year-over-year to £1,665.2m, while reported revenue declined 1% due to currency effects.

• Adjusted operating profit was £333.9m, down 4% reported but up 4% organically; adjusted operating margin at 20.1% (down 60bps reported, up 10bps organic); statutory margin at 18.3% (up 140bps).

• Adjusted EPS declined 8% to 286.3p; basic EPS up 4% to 259.6p; full-year dividend increased by 3% to 165.0p per share.

• Adjusted cash conversion improved to 87% from 81% year-over-year, with working capital improvements and lower CapEx.

• Net debt reduced to £596.2m (1.6x EBITDA), with ROCE at 35.5% and ROIC at 12.8%.

Outlook and guidance

• 2025 organic revenue growth expected to be consistent with 2024, remaining well ahead of IP, with higher growth in the second half and margin progress anticipated.

• Group adjusted operating profit margin expected to exceed 2024’s FX-adjusted 19.6%; mid-single-digit organic growth in adjusted operating profit targeted.

• Medium-term goal to reach 22%-23% operating margin, driven by organic growth, operational improvements, and procurement savings.

• 2025 guidance: 2% adverse FX impact on revenue, 4% adverse on adjusted operating profit, capex at 5-6% of sales, and adjusted effective tax rate at 27%.

• Cautious approach to IP outlook for 2025 due to macroeconomic and geopolitical uncertainties.