Overview
In-line Instrumentation provides process analytical measurement, asset monitoring and on-line controls for both primary processing and the converting industries. Our products and applications provide precision measurement in challenging operating environments, ensuring process quality, asset uptime, safety, and improved yield. The operating companies in this segment are Beta LaserMike, Brüel & Kjær Vibro, BTG Group, Fusion UV Systems, NDC Infrared Engineering, and Servomex.

Market drivers
The growing requirement to improve process manufacturing productivity and drive down costs in an increasingly competitive global environment has led to greater demand for process instrumentation. End-user markets are facilities with critical plant assets such as paper mills and converting plants where downtime and lost production are costly. Environmental issues are also key drivers for process instrumentation in these industries. The oil and gas industry continues to focus on enhancing productivity and is seeing growing demand from the industrialising economies. Increasing power costs have led energy-intensive industries such as pulp and paper to install new instrumentation as they seek production efficiencies. Investment in infrastructure is also driving demand for process control solutions worldwide. The growth in demand for renewable resources, for example alternative energy sources such as hydro-electric and wind power, as well as the need to meet regulations on reducing emissions, has led to an increase in demand for process control solutions. Safety is also a priority in these industries, where it is a requirement to monitor emissions and other harmful substances in order to comply with increased health and safety regulation.

Segment performance
Sales in In-line Instrumentation declined by 2% (decline of 13% at constant currencies) to £227.5 million. Operating profit decreased by 3% to £41.5 million and, at 18.2%, operating margins remained in line with the prior year (2008: 18.3%). The high content of service and consumables in this segment resulted in margins being largely unaffected.

Orders were weak from original equipment manufacturers. However, sales of service, spare parts and consumables, which are a key feature of this segment, were more resilient compared with sales of new products and systems, as customers focused on maintaining existing facilities.

The pulp and paper industry experienced some capacity closures and widespread temporary production curtailments, particularly in Europe, as paper producers de-stocked in response to reduced demand. Nevertheless, sales of BTG’s high performance creping blades to tissue manufacturers grew throughout the year. BTG launched a number of new products designed to help paper manufacturers reduce their costs and improve paper properties, including a range of optical sensors for measuring pulp consistency and a new high performance creping blade which improves machine uptime whilst enhancing tissue quality.

In the energy, refining and utilities sector, customer investment provided good demand for both Brüel & Kjær Vibro and Servomex. Within the gas-based process industries, customer requirements are for higher reliability of equipment and reduced maintenance, and Servomex launched a number of new products during the year which meet this demand and also provide improved measurement accuracy and lower cost of ownership. In July, the company secured its first order to supply the award-winning Servotough Oxy oxygen analysers to China. In September, Servomex launched the Servotough Laser analyser, the first product to benefit from the strategic partnership with Norsk Elektro Optikk (NEO). The result is an analyser that combines NEO’s precision technologies within a rugged Servomex design, suitable for a wide range of emissions control and process and combustion control applications.

Demand for Brüel & Kjær Vibro’s remote monitoring systems and safety systems in the power market led to a number of orders for its solutions and its Compass 6000 predictive monitoring system was installed in a number of large oil and gas plants. The market for renewable energy also grew strongly, with the company receiving significant orders for large wind farms and in December Brüel & Kjær Vibro entered into an agreement with Suzlon, one of the world’s largest wind turbine manufacturers, to supply remote condition monitoring solutions for their range of wind turbines.

Increasing interest in hybrid vehicles resulted in a number of orders for NDC for battery manufacturing applications and new developments in LCD and solar cell technology brought orders for both NDC’s measurement systems and Fusion’s UV curing systems. In addition, a number of developments within the display market have led to increased demand for UV curing systems, in particular for the manufacture of LCDs used in items such as televisions, e-book readers and satellite navigation systems.

In the converting industry, increased demand for packaged food products benefited NDC, with the company seeing strong orders from food manufacturers for its sensors. A new blown film system was launched for measuring and controlling the multi-layer barrier films used in complex food packaging. Beta LaserMike’s LaserSpeed product continued to perform well and demand for products to measure metals and cable remained strong as the Chinese economy continued to expand. The LaserSpeed’s greater accuracy of measurement compared with conventional methods achieves material savings of 1–2%, often resulting in payback periods of just a few weeks. Beta LaserMike also launched the Centerscan non-contact eccentricity gauge for wire and cable applications. During the year, Fusion received its first order for the commercial UV coating of steel. This new application enables rolls of steel to be produced with special coating qualities, for example stainless steel coatings with anti-fingerprint properties which are particularly suitable for the domestic appliance market.

In the healthcare market, Beta LaserMike secured a number of important orders for its Ultrascan product for medical tubing applications. These applications require measuring wall thicknesses around one-half the width of a human hair. Also in the healthcare market, Servomex launched the Paracube Micro oxygen sensor. This is the latest addition to Servomex’s portfolio of innovative gas sensors and provides oxygen analysis for critical care ventilators, anatomical anaesthesia, patient monitoring and other life-critical healthcare applications.

Government-funded infrastructure development in China and India led to robust demand for optical fibre and related cable products for the telecommunications industry, driven by 3G technology and fibre to the home, which benefited Fusion and Beta LaserMike. Beta LaserMike’s systems are used in optical fibre production to measure the fibre to an accuracy of 0.2 microns, taking 2,500 measurements per second, and the company also provides a laser-based flaw detector.

Outlook
Market conditions are improving in some of this segment’s end markets. Demand in the upstream energy and hydrocarbon processing markets should remain in line with that experienced in 2009. A sustained recovery in pulp and paper and other converting industries will depend on a broader recovery in consumer demand for their end products. We anticipate that service, spare parts and consumables will continue to provide a resilient revenue base for this segment.