Join our community of smart investors

Spectris suffers weak trading

Instrumentation and controls group Spectris faces a profit crisis after a weak second quarter dampened half-year results
July 25, 2014

Poor second-quarter trading and a weak performance from the materials analysis division has left instrumentation and controls group Spectris (SXS) facing a minor profit crisis at the half-year point. The shares fell 8 per cent on the day of these results.

IC TIP: Hold at 2,017p

The materials analysis business - which develops products to analyse particles and materials prior to manufacturing - reported a 5 per cent decline in like-for-like sales in the first half. Management blamed weak customer demand in the metals, minerals and mining industries. This was partially offset by acquisitions and better performances from the group's other three divisions, which collectively reported like-for-like sales growth of 4 per cent. But the modest top-line growth at group level was more than wiped out by foreign exchange movements. Rising costs also drove margins down, resulting in adjusted operating profit falling 12 per cent to £70m.

But chief executive John O'Higgins is confident trading will pick up in the second half. A number of investments made in the first half are expected to pay off by December, including three recent acquisitions, new product launches and a substantial order backlog. Broker Numis Securities expects pre-tax profits of £203m for the full year, giving EPS of 132p - down from £206m and 133p.

SPECTRIS (SXS)

ORD PRICE:2,015pMARKET VALUE:£2.4bn
TOUCH:2,013p-2,017p12-MONTH HIGH:2,572pLOW: 2,010p
DIVIDEND YIELD:2.2%PE RATIO:17
NET ASSET VALUE:699p*NET DEBT:13%

Half-year to 30 JunTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201357015590.914.75
20145405939.416
% change-5-62-57+8

Ex-div: 15 Oct

Payment: 12 Nov

*Includes intangible assets of £678m, or 570p a share