Asia Pacific demand drives SPX growth

01-Aug-2012 - Last updated on 02-Aug-2012 at 10:49 GMT

Order growth was driven primarily by system orders in Asia Pacific where food and beverage customers are adding capacity to meet rising consumer demand, said SPX.

In the firm's Flow Technology segment, revenues for Q2 ending 30 June were $677.3m (€551.7m) compared to $492.8m in Q2 2011, an increase of 37.4%.

In Flow's industrial markets, orders in Europe were down in the first half. However, this decline was offset by order growth in the Americas and Asia Pacific.

Sales of large-scale food and beverage systems in Asia Pacific experienced the most growth, which was partially offset by a decline in Europe.

Acquisitions increased reported revenues by 31.5%, driven primarily by ClydeUnion where revenue increased 15.1% sequentially.

Segment income was $69.8m, or 10.3% of revenues, in Q2 2012, compared to $56.6m, or 11.5% in Q2 2011.

Europe struggle

Speaking in an analysts call, Jeremy Smeltser, chief financial officer and vice president of Flow Technology, said SPX continues to see strong order activity in most end markets and geographies, with the industrial markets in Europe being the most notable exception.

“We've probably seen a little bit of hesitancy on closing out large projects in food and beverage systems in Q2, but not so much on the oil and gas side.

“Looking at the full year, we have revised Flow's full year targets to reflect currency changes, a weaker demand in Europe and our updated assumptions for ClydeUnion.”

He added SPX were targeting 30% to 35% revenue growth for the full year.

“This assumes a 3% currency headwind and about 30% growth from acquisitions. We are targeting margins to be between 10.9% and 11.4% for the year.”

Build around Flow business

Christopher J. Kearney, chairman, president, and chief executive officer of SPX, said the firm had consistently marched down a path of building the Flow business.

“The first venture was in food and beverage, beginning with the APV acquisition and the acquisitions that came subsequent to that, that has played out very nicely.

“But at the end of the day, we are committed to building this company around the Flow platform, and we think there are opportunities out there.

“We expect Flow's organic growth rate to moderate in the second half due to tougher comparisons and lower European sales.”

APV products include pumps, valves, heat exchangers and homogenizers and are active in the processed food, beverage and dairy markets.