Porvair develops specialist filtration, laboratory and environmental technology businesses for the benefit of all stakeholders. Principal measures of success include consistent earnings growth and improvements in selected ESG measures as set out in the full ESG report..
PORVAIR BUSINESSES HAVE CERTAIN COMMON KEY CHARACTERISTICS
Specialist design or engineering skills are required.
Product use and replacement is mandated by regulation, quality accreditation or a maintenance cycle
Products are typically designed into a system that will have a long life-cycle and must perform to a given specification.
Orders are won by offering the best technical solutions at an acceptable commercial cost. Technical expertise is necessary in all markets served. New products are often adaptations of existing designs with attributes validated in our own test and measurement laboratories. Experience in specific markets and applications is valuable in building customer confidence. Domain knowledge is important, as is deciding where to direct resources.
This strategy continues to work well for the Group, which, from a position of relative financial strength, invests in both organic and acquired growth, as appropriate.
Review the Group’s ESG report to understand:
- Porvair’s ESG management framework and goals;
- How the Group might address a Net zero carbon future;
- ESG metrics and results; and
- How the Group has acted for the benefit of its stakeholders.
Our business model
The five principles
Focus on markets where we see long term growth potential
Aerospace & Industrial; Laboratory; and Metal Melt Quality. All have clear structural growth drivers, which are:
- Population growth.
- Environmental and emissions regulations.
- Growth in analytical sciences.
- Manufacturing process quality and efficiency.
Look for applications where product use is mandated and replacement demand is regular
Our products typically clean, or confine emissions to protect complex downstream systems and are replaced regularly. A high proportion of our annual revenue is from repeat orders, such as
- Aviation filters are replaced as part of regular maintenance checks.
- Metal melt filters are replaced after each use.
- Sample preparation filters used in analytical sciences are replaced after each us.
Make new product development a core business activity
Through a focus on new product development, we aim to generate growth rates in excess of the underlying market. Where possible, we build differentiation and intellectual property around our product developments.
- Robust intellectual property
- Around 20% of revenues are covered by patents.
- Most individual filtration products require process qualification.
- All aviation filters have design accreditation.
Establish geographic presence where end-markets require
Our geographic presence follows the markets we serve.
Approximately 45% of revenue is from the Americas; 25% from Asia; 20% from Continental Europe; 10% from the UK.
The Group has plants in the US, UK, Germany, the Netherlands and China.
Approximately 45% of revenue is manufactured in the US, 30% in the UK, 20% in Continental Europe and 5% in China.
Market geography
- Most aviation engineering is carried out in the US and EU, with China and Brazil also active.
- Water cleanliness regulation is growing throughout the world.
- Most higher grades of aluminium are smelted in the US, Middle East and China.
Invest in both organic and acquired growth
We aim to meet dividend and investment needs from free cash flow and modest borrowing facilities. In recent years we have expanded manufacturing capacity in the UK, Germany, the Netherlands, US and China and made several acquisitions. All investments are subject to a hurdle rate analysis based on strategic and financial priorities.
Our investment proposition
We operate in attractive niche markets. We deliver extensive industry knowledge and engineering capabilities to build strong customer relationships and our geographic presence follows the markets and customers we serve. We focus on:
• Markets with long term growth potential;
• Applications that are mandated and replacement is regular; and
• New product development.
We maintain a conservative financing structure and aim to meet dividends, organic investment and acquisitions from free cash flow and modest borrowings.