Europe, Middle East and Africa
Sales in Europe, Middle East and Africa (EMEA) at £112.8 million (2009: £113.2 million) were flat in sterling with a small negative currency impact from the weaker euro, offset by incremental sales from the acquisition of our Turkish distributor in October 2009. Market conditions and results were very mixed from country to country. Sales and profits were well ahead in Germany, helped by growth in export-oriented customers. Our Russian business grew strongly, continuing the sharp recovery that started in the second half of last year. Our M&M Italian valve business, saw a much improved performance as OEM activity increased. Sales and profits were marginally lower in our UK sales operation, although we secured several good energy saving projects earlier in the year that will ship in the second half. Trading conditions have been difficult for our sales companies in France, Italy and a number of other smaller operations in Europe, and their sales and profits were lower. Overall sales of controls and heat exchange solutions were lower from reduced project activity, particularly from Italy due primarily to a tough compare, but offset by higher sales of core steam specialties products. The performance of our manufacturing operations in the UK and France improved markedly versus the first half of 2009, which had been impacted by internal destocking by our direct sales operations. As factory throughput increased, we captured good operational efficiencies following the headcount reductions last year and benefited from lower material costs and a favourable product mix. Overall operating profit in EMEA increased by 19% from £15.6 million to £18.6 million; at constant currency the increase was 20%. The operating profit margin rose from 13.8% to 16.5%.
Americas
Sales in the Americas at £59.0 million (2009: £51.0 million) increased by 16% including a 4% gain from favourable exchange rates, notably Brazil, and a 2% contribution for the first-time consolidation of Mexico from late May. Growth was particularly strong in Latin America and our operations in Argentina and Brazil significantly increased sales and profits, benefiting from the higher business levels and capitalising on the significant cost reduction actions taken last year that reduced the cost base. Sales and profits were well ahead in the USA due to lower material costs and a reduced headcount. Market conditions remained weak in Canada with a lack of project business and profits were down. In the Americas, sales were up across most product lines except heat exchange packages. Services sales grew substantially in the period as customers began to increase their maintenance spend. Overall operating profit in the Americas increased by 82% from £6.0 million to £10.9 million (up 75% at constant currency). The operating profit margin rose sharply from 11.7% to 18.5%.
Asia Pacific
Sales in Asia Pacific at £56.7 million (2009: £49.0 million) increased by 16% (up 9% at constant currency). Market conditions were mixed but overall good. Sales increased across virtually all product lines and we won a number of larger projects, which will benefit the second half year. Our company in China, the biggest in the region, continued to make excellent progress and our new much larger plant in Shanghai was opened in June, including factory, warehouse, offices and superb training facility. Demand increased in Korea, translating into higher sales and profits and with a robust order book heading into the second half, but trading conditions and results in some of our smaller operations were more mixed. Sales and profits in our Indian Associate were well ahead. Overall operating profit in Asia Pacific was up 39% from £9.4 million to £13.1 million. Exchange movements were favourable in the first half and at constant currency, the increase in operating profit was 24%. The operating profit margin improved further from 19.2% to 23.0%.
