A dreadful start to the year scarred Spectris's (SXS) first half. But sales improved markedly over the next three months and, barring any slip-ups, the instrumentation and controls group should make full-year forecasts.
Sales grew 7 per cent in the second quarter, or 3 per cent on a like-for-like basis, as demand from aerospace, pulp and paper and pharmaceutical customers offset weakness in technology sectors. Encouragingly, the recovery was broad-based, with sequential growth across all the divisions. However, the 9 per cent slump in organic sales in the first quarter proved impossible to claw back fully, and adjusted pre-tax profit, which strips out the £98.4m made on the sale of Fusion UV in January, fell 13 per cent to £75m. The US, Spectris's largest market, hasn't returned to growth yet, either, and larger projects are taking longer to get signed off. Lower volumes, and a shift towards bigger projects where returns aren't as good, also hurt margins - down 220 basis points to 14.1 per cent. Still, the first half tends to be weaker and much of that shortfall should be recovered in the months ahead. Cost-cutting will help, too, and Spectris has already found a third of the £10m in promised savings. The rest should come through by the year-end.
Broker Numis Securities expects full-year adjusted pre-tax profit of £214m, giving adjusted EPS of 138.9p (from £217.3m and 137.5p in 2012).
SPECTRIS (SXS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 2,100p | MARKET VALUE: | £2.49bn | |
| TOUCH: | 2,097-2,102p | 12-MONTH HIGH: | 2,509p | Low: 1,476p |
| DIVIDEND YIELD: | 1.9% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 687p* | NET DEBT: | 19% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 597 | 74.8 | 49.0 | 13.5 |
| 2013 | 570 | 155 | 90.9 | 14.8 |
| % change | -5 | +107 | +86 | +10 |
Ex-div: 16 Oct Payment: 8 Nov *Includes intangible assets of £742m, or 626p a share | ||||
