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Porvair plc, UK
COMPANY PROFILE
Porvair plc, UK Profile
Porvair is a specialist filtration and environmental technology company. The company operates two segments, Metals Filtration and Microfiltration. The former, with operations in the USA and China employing 140 people, uses porous and microporous ceramics expertise to serve the molten metals filtration, thermal processing and catalyst media markets. The Microfiltration division, with facilities in the UK, USA and Germany employing 340 people, designs bespoke filtration systems for applications in the aerospace, pharmaceutical and industrial process industries. Analysis
Porvair had a solid year in a demanding fiscal 2009. Turnover was up 1.0% on the previous year at £55.2 million, benefiting from a full-year contribution from Seal Analytical, acquired in July 2008. Revenues in the Microfiltration division were up 13% on 2008 at £36.5 million, although stripping out acquisition effects sales were down 10%. Demand from the division’s aviation customer base fell around 11% at constant currencies, which the company regarded as a resilient performance in the challenging economic circumstances. Sales to energy markets remained strong, offset by weakness in general industrial demand, particularly in the USA. Seal Analytical, the water analysis business acquired in the prior year, had a strong first year with weaker demand in the USA offset by improved sales in Asia. Porvair reported that the rationalisation and integration of this business was finished during the year and that it had started a growth plan based on geographical expansion and new product development. In Porvair’s Metals Filtration division revenues fell 16.9% from the record level set in 2008 to £18.7 million. In its operating currency, US dollars, the reduction was 32% reflecting tough trading in the aluminium and US automotive industries. With the decline evident early in the year, Porvair implemented a restructuring programme with staff numbers reduced by 40% and the remaining staff participating in a salary sacrifice scheme. While US and European demand for the division’s products were significantly down, sales in Asia increased. Porvair’s operating profit for the year was £2.1 million, down 56.3% on the year before, while profit before tax and exceptional items fell 59.5% to £1.7 million. The restructuring programme resulted in restructuring costs for the year of £0.7 million. Porvair spent £2.7 million on R&D during the year, down 10% on the £3.0 million spent in 2008. In 2009 13% of the company’s revenues came from sales of products that had been recently commercialised, such as a nitrogen generating system (NGS) brought into production for Boeing.
COMMENT Porvair’s performance in fiscal 2009 was dominated by a sharp fall in demand in its first half-year. This was attributed to unprecedented production cuts in many industrial sectors, particularly in the USA. Porvair said its Metals Filtration division was hit by demand reductions of up to 50% in some markets, notably global aluminium production and the US automotive industry. The second half of fiscal 2009 was better, as the de-stocking phase of the recession eased and Porvair’s restructuring efforts took effect. Looking forward, in its Microfiltration division, Porvair is anticipating similar levels of revenue in 2010 to that achieved in 2009 with expected weakness in some segments offset by new product introductions. In particular, it is looking for continuing growth for its proprietary inerting filters, a vital part of an aircraft’s fuel tank safety system. The general level of activity and the order book in the division’s energy (nuclear and gasification) market remained healthy during 2009, prompting Porvair to open a sales office in France to support its plans for expansion. In its Metals Filtration division, Porvair is also looking to new products as the key to the unit’s sustainable recovery. It claims that its patented Selee CS-X aluminium filter has already gained around a 50% global share of this market, with 80% of Porvair’s current customers now using the product. The company expects these numbers to increase further in 2010. Porvair reports that customer trials of other new products have also gone well, notably a more robust foundry filter, for which commercial shipments began at the end of fiscal 2009. ■
Key Figures (£ million) Porvair plc
Year ended 30.11 2009
2008
2007
2006
2005
Turnover Of Which: Metals Filtration Microfiltration
55.2
54.8
45.5
46.2
44.9
18.7 36.5
22.5 32.3
19.3 26.2
19.8 26.4
18.9 25.4
Cost of Sales
37.8
37.2
31.3
31.4
31.0
Gross Profit
17.4
17.7
14.2
14.8
13.9
Operating Profit
2.8
4.8
3.8
3.7
3.3
Profit before Income Tax
1.7
4.2
3.4
3.1
2.7
Profit for the Year
1.1
2.9
2.4
2.1
1.4
Contact Details
Chief Executive: Chair: Address:
April 2010
Ben Stocks Charles Matthews Brampton House, 50 Bergen Way Kings Lynn PE30 2JG, UK
Tel: +44 1553 765500 Fax: +44 1553 765599 Web: www.porvair.com Filtration Industry Analyst
7
Porvair plc, UK Profile
Porvair is a specialist filtration and environmental technology company. The company operates two segments, Metals Filtration and Microfiltration. The former, with operations in the USA and China employing 140 people, uses porous and microporous ceramics expertise to serve the molten metals filtration, thermal processing and catalyst media markets. The Microfiltration division, with facilities in the UK, USA and Germany employing 340 people, designs bespoke filtration systems for applications in the aerospace, pharmaceutical and industrial process industries. Analysis
Porvair had a solid year in a demanding fiscal 2009. Turnover was up 1.0% on the previous year at £55.2 million, benefiting from a full-year contribution from Seal Analytical, acquired in July 2008. Revenues in the Microfiltration division were up 13% on 2008 at £36.5 million, although stripping out acquisition effects sales were down 10%. Demand from the division’s aviation customer base fell around 11% at constant currencies, which the company regarded as a resilient performance in the challenging economic circumstances. Sales to energy markets remained strong, offset by weakness in general industrial demand, particularly in the USA. Seal Analytical, the water analysis business acquired in the prior year, had a strong first year with weaker demand in the USA offset by improved sales in Asia. Porvair reported that the rationalisation and integration of this business was finished during the year and that it had started a growth plan based on geographical expansion and new product development. In Porvair’s Metals Filtration division revenues fell 16.9% from the record level set in 2008 to £18.7 million. In its operating currency, US dollars, the reduction was 32% reflecting tough trading in the aluminium and US automotive industries. With the decline evident early in the year, Porvair implemented a restructuring programme with staff numbers reduced by 40% and the remaining staff participating in a salary sacrifice scheme. While US and European demand for the division’s products were significantly down, sales in Asia increased. Porvair’s operating profit for the year was £2.1 million, down 56.3% on the year before, while profit before tax and exceptional items fell 59.5% to £1.7 million. The restructuring programme resulted in restructuring costs for the year of £0.7 million. Porvair spent £2.7 million on R&D during the year, down 10% on the £3.0 million spent in 2008. In 2009 13% of the company’s revenues came from sales of products that had been recently commercialised, such as a nitrogen generating system (NGS) brought into production for Boeing.
COMMENT Porvair’s performance in fiscal 2009 was dominated by a sharp fall in demand in its first half-year. This was attributed to unprecedented production cuts in many industrial sectors, particularly in the USA. Porvair said its Metals Filtration division was hit by demand reductions of up to 50% in some markets, notably global aluminium production and the US automotive industry. The second half of fiscal 2009 was better, as the de-stocking phase of the recession eased and Porvair’s restructuring efforts took effect. Looking forward, in its Microfiltration division, Porvair is anticipating similar levels of revenue in 2010 to that achieved in 2009 with expected weakness in some segments offset by new product introductions. In particular, it is looking for continuing growth for its proprietary inerting filters, a vital part of an aircraft’s fuel tank safety system. The general level of activity and the order book in the division’s energy (nuclear and gasification) market remained healthy during 2009, prompting Porvair to open a sales office in France to support its plans for expansion. In its Metals Filtration division, Porvair is also looking to new products as the key to the unit’s sustainable recovery. It claims that its patented Selee CS-X aluminium filter has already gained around a 50% global share of this market, with 80% of Porvair’s current customers now using the product. The company expects these numbers to increase further in 2010. Porvair reports that customer trials of other new products have also gone well, notably a more robust foundry filter, for which commercial shipments began at the end of fiscal 2009. ■
Key Figures (£ million) Porvair plc
Year ended 30.11 2009
2008
2007
2006
2005
Turnover Of Which: Metals Filtration Microfiltration
55.2
54.8
45.5
46.2
44.9
18.7 36.5
22.5 32.3
19.3 26.2
19.8 26.4
18.9 25.4
Cost of Sales
37.8
37.2
31.3
31.4
31.0
Gross Profit
17.4
17.7
14.2
14.8
13.9
Operating Profit
2.8
4.8
3.8
3.7
3.3
Profit before Income Tax
1.7
4.2
3.4
3.1
2.7
Profit for the Year
1.1
2.9
2.4
2.1
1.4
Contact Details
Chief Executive: Chair: Address:
April 2010
Ben Stocks Charles Matthews Brampton House, 50 Bergen Way Kings Lynn PE30 2JG, UK
Tel: +44 1553 765500 Fax: +44 1553 765599 Web: www.porvair.com Filtration Industry Analyst
7