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Sector performance
Sales, profits and operating margins showed good improvement in all three sectors. A more detailed analysis of individual sector performance follows.
Process Technology
Sales increased by 2% to £163.4 million, and
by 9% at constant currencies. Operating profit
increased by 16% to £19.2 million and operating
margins improved by 1.4 percentage points
to 11.8%. Restructuring charges in the first half
of 2007 were £nil (2006: £0.6 million).
Demand from the pharmaceutical industry continued to be strong for Malvern, PANalytical and Particle Measuring Systems in Europe and, increasingly, in Asia as the globalisation of pharmaceutical markets continues. India and China are growing in importance as key countries for multinational pharmaceutical companies to carry out manufacturing and research activities. There is evidence of some slowdown in demand in North America as the pharmaceutical industry restructures in response to the increase in the use of generic prescription drugs and the growth in emerging markets. In March Malvern signed an agreement with Farfield Scientific Limited, giving the company exclusive distribution rights in North, Central and South America for Farfield’s unique range of analytical instruments which are used to analyse the structure and behaviour of proteins and nano-materials in the life sciences industry.
PANalytical continued to see good demand for its X-ray analysis systems from the semiconductor industry to facilitate research and development of new materials and processes. Fusion saw continued growth from the sale of its UV curing systems into Asia for the production of flat panel displays. However, there is some evidence of a slowdown in the semiconductor and some electronics sectors in North America.
Demand from the automotive and aerospace industries was strong for Brüel & Kjær Sound & Vibration, as its noise testing systems were chosen by leading manufacturers for new model development programmes. The recently released automotive noise vibration harshness (NVH) vehicle simulator, which enables the noise and vibration from vehicle components to be simulated at the design stage before a physical prototype has been built, has already been ordered by a number of major automotive customers. In March Brüel & Kjær received the “Company of the year” award from Automotive Testing Technology Magazine based on, amongst other factors, its work in the field of NVH simulation. In the aerospace market Brüel & Kjær had success with its jet engine noise monitoring applications. These systems, based on the PULSE analyser platform, are used by major aero engine manufacturers for noise certification in accordance with regulations on engine noise emissions.
The mining and minerals sector continued to see growth, particularly in India, where there are increasing opportunities in infrastructure projects. PANalytical’s Axios XRF systems saw strong demand in a wide range of processing industries, particularly in China. In April PANalytical entered into a partnership agreement with OBLF GmbH, which brings optical atomic emission spectrometers to complement PANalytical’s X-ray fluorescence (XRF) spectrometers for the analysis of metals. Malvern’s SyNIRgi near infrared chemical imaging system, based on the platform which Malvern acquired from Spectral Dimensions last year, won an Innovation Award for materials analysis and characterisation at the Powtech/Technopharm congress.
In-line Instrumentation
Sales in the In-line Instrumentation sector
increased by 1% to £78.7 million, and by 6%
at constant currencies. Operating profit grew
by 39% to £10.7 million, with operating
margins improving by 3.8 percentage points
to 13.6%, reflecting management actions and
the benefits of the restructuring spend.
Restructuring charges in the first half of 2007
were £0.4 million (2006: £1.5 million).
In the pulp and paper industry a number of new paper mills have come on stream, particularly in Asia and South America, as investment increases to meet rising demand created by firmer pulp prices, which is starting to benefit BTG’s instrumentation business. At the same time, less efficient mills are being decommissioned in other parts of the world. BTG’s Duroblade business performed well. The IPI business acquired in 2006 has shown good growth, benefiting from Duroblade’s worldwide sales network, and a number of new high performance blades have been launched based on the latest materials technology.
Brüel & Kjær Vibro’s V6000 safety monitoring system has been well received by the energy and petrochemical markets with a large number of systems already installed and operating. Servomex won two major orders for analysers and sampling systems for a new liquefied natural gas (LNG) terminal and refinery in North America being built to meet the increasing demand for natural gas.
Strong demand in the rubber market in Asia, particularly China, helped drive sales of NDC’s scanning systems. Demand from the converting market in North America continued to be good as investment in new production lines continued and investment in flexible packaging and label production recovered. There was good demand for the company’s sensors from the food industry where they are used to measure, amongst other things, moisture and oil content in snack foods.
Beta LaserMike saw good growth in sales to China, with particularly strong demand for its LaserSpeed family of products. These are used in the production of steel, wire, cable and other continuously manufactured products, where their greater accuracy compared with conventional methods results in significant material savings for customers.
Electronic Controls
Sales in the Electronic Controls sector increased
by 2% to £66.6 million, and by 7% at constant
currencies. Operating profit grew by 36% to
£9.5 million and operating margins increased
by 3.6 percentage points to 14.3%.
Profitability improved at HBM as the continuing focus on higher value products, together with overhead efficiency, showed benefits. The company launched an optical strain gauge-based measurement system which is particularly suitable for stress analysis of composite materials. This is increasingly used in the aerospace industry and in other applications, for example wind turbine blades.
Microscan continued to extend its highly successful range of Quadrus bar code scanning products into a broad spread of industries, with the recently launched Quadrus MINI 3 providing the highest resolution currently available for data tracking. With the ability to decode high density codes of less than 3 millimetres square, it is designed for use in industries such as printed circuit board assembly and semiconductor manufacturing.
Red Lion Controls has been building additional distribution channels and is now represented in multiple catalogues in Europe and North America, where sales of its high volume products are showing strong growth. Red Lion’s network communication products saw good growth, particularly in Europe, and its human machine interface (HMI) products performed well in North America. A new range of displays was launched during the first half.