2012 Annual Report - Spirax-Sarco Engineering plc

Watson-Marlow
Organic sales increased by 8% to
£124.5 million, with all product lines
experiencing growth.
Jay Whalen,
Executive Director
Revenue £m
2008 75.4
2009
2010
2011
2012
Operating profit £m
2008 18.4
2009
2010
2011
2012
22.3
83.8
103.0
118.4
124.5
30.8
34.4
36.8
Sales increased by 5% to £124.5 million
(2011 : £118.4 million). Overall currency
movements were unfavourable, in particular
due to the weakness of the euro, and at
constant currency sales were up 8%. There
were increases across all product lines, with
the strongest contributions from our larger
capacity Bredel hose pumps, our OEM-based
Alitea microflow pumps and Watson-Marlow
tubing products. Operating profit increased
by 7% to £36.8 million (2011 : £34.4 million).
Excluding the impact of unfavourable
currency movements, operating profit was
ahead 10%. The operating profit margin
improved to 29.6% (2011 : 29.1%), having
been lower at the half year due to significantly
higher market penetration and product
development expense in the period, which, as
expected, moderated in the second half.
Trading conditions were broadly positive in
the bio-pharmaceutical, precious metals
processing and OEM markets, and we have
made good gains in the food & beverage
markets. Capital project spending in our water
& wastewater treatment markets was lower
due to continued restrictions on government
finances in many countries, and the general
industrial market has been weak, with
continued significant price pressures.
Sales growth was achieved in all geographic
regions. Trading conditions were least
favourable in EMEA, which accounts for just
over 40% of Watson-Marlow Pumps sales,
although most EMEA operations saw sales
growth, with good progress in many of our
small and emerging markets as direct sales
expanded and further sector-focused sales
resource was added.
Sales were ahead in all Watson-Marlow
companies in Asia Pacific and the new
operations in India and Singapore performed
well. The emerging markets in Asia Pacific
continue to be a focus for our direct sales
approach as we seek to capitalise on the
many opportunities in the region’s underdeveloped
peristaltic pumping market.
Sales growth was strongest for Watson-
Marlow in the Americas and in Latin America
in particular, where each of our companies
performed well ahead of the prior year. North
America, which accounts for nearly 40% of
Watson-Marlow Pumps sales, performed
well, due in part to a significant backlog
reduction in the US in the fourth quarter,
although there was softer underlying demand
in part due to the timing of OEM orders.
Product development is an important
contributor to the growth of Watson-Marlow
Pumps as we expand the capability,
functionality and performance of our pumps
and tubing in order to open up new market
areas and take market share from other
pump types. 2012 was a good year for new
products, including the successful launch of
the important and innovative Qdos pump with
its revolutionary pump head where initial sales
have exceeded our expectations.
24 Spirax-Sarco Engineering plc Annual Report and Accounts 2012