When we tipped instrumentation and controls specialist Spectris (SXS) in April, we highlighted its strong recent track record of navigating choppy waters. On the basis of these half-year figures, there's little let up in the weakness of the company's end markets. However, despite comments that there is "increased macro uncertainty" and "limited visibility on trading", chief executive John O'Higgins declined to cut forecasts, affirming that the "expected overall outcome for 2016 is unchanged".
One reason for this confidence is the favourable recent swing in currency rates, which flattered headline numbers somewhat. In fact, after adjusting for a positive foreign exchange effect and excluding acquisitions, Spectris booked a 6.9 per cent like-for-like decline in operating profits to £68.9m. With sales under pressure, management is focused on any manufacturing or administrative efficiencies it can find.
Acquisitions are also a big part of management's solution, proof of which came in the simultaneous announcement of the €15.8m (£13.3m) purchase of DISCOM, a leading provider of sound and vibration test systems for the automotive market. Further deals will be considered only if the targets pass Spectris' key hurdle of a 14 per cent pre-tax cash flow return on invested capital, as DISCOM did.
Analysts at Numis are forecasting full year pre-tax earnings of £181m, giving EPS of 117p, against £176m and 114p in 2015.
SPECTRIS (SXS) | ||||
---|---|---|---|---|
ORD PRICE: | 1,888p | MARKET VALUE: | £2.3bn | |
TOUCH: | 1887-1892p | 12-MONTH HIGH: | 2,007p | LOW: 1,441p |
DIVIDEND YIELD: | 2.7% | PE RATIO: | 21 | |
NET ASSET VALUE: | 873p* | NET DEBT: | 10% |
Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
---|---|---|---|---|
2015 | 563 | 49.2 | 33.9 | 17.3 |
2016 | 581 | 41.0 | 26.0 | 18.0 |
% change | +3 | -17 | -23 | +4 |
Ex-div: 13 Oct Payment: 11 Nov *Includes intangible assets of £878m, or 737p a share. |