In a mixed set of results, telecoms and wireless testing provider Spirent (SPT) delivered flat revenues, but continues to generate good profits and throw off cash. Although some customers rationalised spending on their networks due to the continuing macro uncertainty, analysts remain excited about the group's medium- to long-term growth drivers as many significant industry projects remain in their infancy.
However, while the huge spending projects planned by the telecoms industry underpins long-term growth prospects, chief executive Bill Burns cautions on the short-term outlook after the company used up a "lot of backlog" to get to its end of year position and is "looking for more signs of recovery before we can talk about more than modest growth in 2013". That news prompted analysts at Panmure Gordon to trim their operating profit estimates from $132.7m (£87.5m) to $125.8m ($119m in 2012), to produce flat adjusted EPS of 14.1¢.
The lack of turnover growth in 2012 was down to a slump in revenues in the Service Assurance live testing division, although the benefit of cost savings and a recovery in the second half meant underlying operating profits still rose by a fifth to $8.4m. Compensating for a decline in legacy technology business, Mr Burns said the re-signing of a contract with a large service provider in North America underpinned revenues in the fourth quarter and beyond.
However, the key Performance Analysis testing arm suffered a slower second half as temporarily frozen government spending in the US and China hit satellite launches and hence global positioning sales. This largely offset strong growth in data centres and the rollout of fourth generation (4G) mobile networks and high-speed ethernet services.
SPIRENT COMMUNICATIONS (SPT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 152p | MARKET VALUE: | £990m | |
| TOUCH: | 152.6-152.9p | 12-MONTH HIGH: | 176p | LOW: 134p |
| DIVIDEND YIELD: | 1.4% | PE RATIO: | 19 | |
| NET ASSET VALUE: | 76¢ | NET CASH: | $249m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 258 | 50 | 10.1 | 1.10 |
| ($m) | ($m) | (¢) | (¢) | |
| 2009 | 427 | 85 | 13.7 | 1.93 |
| 2010 | 482 | 112 | 11.8 | 2.50 |
| 2011 | 471 | 114 | 13.2 | 2.93 |
| 2012 | 472 | 111 | 12.5 | 3.22 |
| % change | +0 | -3 | -5 | +10 |
Ex-div: 6 Mar Payment: 3 May £1=$1.51 *Includes intangible assets of $207m, or 31¢ a share | ||||
