Spectris is highly operationally geared, even by engineering standards. That mainly explains the explosion in profits at the industrial electronics specialist last year. As demand for its industrial measuring and analysis devices returned, the group operating margin jumped from 10.1 to 15.8 per cent – back to the 2007 peak level.
The recovery emerged first in Spectris’s in-line instrumentation and industrial controls divisions, as manufacturers across many industries started to upgrade production processes. Divisional sales bounced 20 and 34 per cent, respectively, last year. Growth only spread to the other two business units – materials analysis and test and measurement – in the second half of last year, as companies initiated research and development (R&D) projects. These divisions therefore show more muted top-line growth for 2010, but have more room to bounce this year.
Chief executive John O’Higgins now expects more “normal” organic sales growth of 6 per cent, but given the further recovery prospects that looks cautious. In any case, revenues will be boosted by acquisitions - there were five last year - and at the profit level by ongoing operational gearing.
Analysts at Citi forecasts 2011 adjusted pre-tax profits of £149m and EPS of 94.7p (2010: £132m and 87p).
SPECTRIS (SXS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,373p | MARKET VALUE: | £ 1.6bn | |
| TOUCH: | 1,372-1,375p | 12-MONTH HIGH: | 1,442p | LOW: 736p |
| DIVIDEND YIELD: | 2.0% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 443p* | NET DEBT: | 17% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2006 | 643 | 86 | 49.4 | 17.5 |
| 2007 | 668 | 118 | 70.9 | 21.0 |
| 2008 | 787 | 106 | 70.3 | 23.4 |
| 2009 | 787 | 54 | 36.9 | 24.3 |
| 2010 | 902 | 120 | 83.1 | 28.0 |
| % change | +15 | +121 | +125 | +15 |
Ex-div:01 Jun Payment:24 Jun *Includes intangibles of £453m, or 390p per share | ||||
