2012 Annual Report - Spirax-Sarco Engineering plc

Americas
Organic sales increased by 6% to
£137.5 million, with good progress in
controls and pre-fabricated packages.
Alberto Grandi
Divisional Director
Revenue £m
2008 101.9
2009
2010
2011
2012
104.6
125.2
134.4
137.5
Sales in the Americas increased by 2% to
£137.5 million (2011 : £134.4 million) but
were impacted by unfavourable currency
movements in Latin America, particularly
Brazil, where the average exchange rate
weakened by 14% against sterling. At
constant currency, Americas sales were
ahead 6%. Sales of controls were well
ahead due to higher activity levels in Latin
America. We also saw significantly higher
sales of pre-fabricated packages in North
America. Trading results were mixed and
overall operating profit declined by 4% to
£26.2 million (2011 : £27.4 million), although
at constant currency operating profit was
above the record result in the prior year.
The operating profit margin was 19.1%
(2011 : 20.4%), with the decrease due to
product mix and volume respectively in our
US and Brazilian operations.
In North America, market conditions were
broadly positive, particularly in Canada where
we achieved good project sales from oil sands
developments in Western Canada booked
early in the year and full year profits were well
ahead of the prior year. In the US, we saw
a meaningful rebound in underlying routine
maintenance business, following a threeyear
period of restraint. We noted, however,
softness in maintenance spending in the
last two months of the year and a slowdown
in large project activity in both the US and
Canada in the second half of the year. In the
US, sales in 2012 were lower, as expected,
due to the non-repeat of the very large flow
metering project in 2011 that was part of the
energy management programme of the
US Federal Government. This was reflected
in lower profits in our US business, which
was also impacted by an unfavourable
product mix. Sales and profits were well
ahead in Canada.
Market conditions in Latin America were
mixed. Sales and profits were down in
Brazil, where industrial production, a key
underlying driver of our markets, contracted
in each quarter of the year, although we
noted easing in the rate of decline in the
fourth quarter. The sharp fall in the Brazilian
real is assisting in the economic turnaround
but also contributed to lower profits reported
in sterling. In Argentina, despite the fragile
economy, we were successful in winning
an exceptional project in the domestic
OPC sector and profits were nicely ahead.
Our Mexican business made strong
progress in the year and we will shortly be
breaking ground on the construction of a
new £4 million manufacturing plant, which
will be operational in 2014, as our Mexican
business is fully integrated into our regional
manufacturing strategy.
Operating profit £m
2008 12.1
2009
13.9
2010
2011
2012
24.3
27.4
26.2
22 Spirax-Sarco Engineering plc Annual Report and Accounts 2012