Weak trading in the US and Russia and a costly restructuring programme combined to reduce adjusted operating profit at Spectris (SXS) by 9 per cent in 2015. That might not sound very inspiring, but full-year figures for the instruments and controls supplier were reasonably encouraging given the state of the markets it serves. Ultimately, a mixed menu of flat like-for-like sales, strong cash conversion and several encouraging investments sufficiently appeased investors, who reacted by sending the group's downtrodden shares up 7 per cent.
Aside from making five acquisitions during the period, which at a combined cost of £45m contributed £5m to adjusted operating profit, £7m was also spent on generating savings. These measures are expected to boost profit by about £10m in 2016. Management's efforts to satisfy customer requirements for a full suite of hardware, software and related services are also expected to soon start paying off.
The industrial controls unit is most in need of attention. Like-for-like sales there fell 7 per cent as the low oil price triggered a slowdown in investment from cash-strapped manufacturers in North America. On a more positive note, the group's material analysis arm benefited from robust pharmaceutical and life sciences markets. According to boss John O'Higgins, pharmaceutical companies are under huge pressure to comply with regulators, a backdrop that's fuelling demand for Spectris' testing services.
Broker N+1 Singer expects adjusted EPS of 117p for the year ahead, up from 113p in FY2015.
| SPECTRIS (SXS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,602p | MARKET VALUE: | £1.9bn | |
| TOUCH: | 1,599-1,605p | 12-MONTH HIGH: | 2,420p | LOW: 1,441p |
| DIVIDEND YIELD: | 3.1% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 811p* | NET DEBT: | 10% | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 1.11 | 166 | 109 | 33.6 |
| 2012 | 1.23 | 185 | 120 | 39.0 |
| 2013 | 1.20 | 272 | 169 | 42.8 |
| 2014 | 1.17 | 171 | 114 | 46.5 |
| 2015 | 1.19 | 142 | 96 | 49.5 |
| % change | +1 | -17 | -16 | +6 |
Ex-div: 25 May Payment: 24 Jun *Includes intangible assets of £787m, or 660p a share | ||||
