The proliferation of connected devices and 4G superfast wireless technology is fuelling global appetite for data, straining the capacity of carriers and network equipment suppliers. Increasing numbers turned to wireless-testing specialist Spirent (SPT) last half, helping it reverse last year’s top-line decline and increase operating profit - adjusted for one-off and acquisition costs - by 13 per cent.
Spirent spent an extra $10.5m on product development and sales and marketing, which helped increase orders by 4 per cent. Management also refocused its business units on particular technologies and markets, such as smartphone performance and communication. That helped "release the creativity and energy" required for Spirent to address burgeoning markets such as vehicle connectivity and healthcare, says chief executive Eric Hutchinson.
The release of 4G licences in China late last year drove a 7 per cent sales increase at Spirent’s wireless segment, as manufacturers rushed to test next-generation devices. North American carriers also showed strong interest in device analytics and measuring their service quality, as more and more calls are made over wireless networks. Similarly, strong demand from service providers in need of 4G and high-speed Ethernet testing spurred 13 per cent sales growth at its larger networks division.
Panmure Gordon forecasts pre-tax profits of $52.7m, giving EPS of 5.9¢, rising to $73.5m and 8.5¢ in 2015.
| SPIRENT (SPT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 101p | MARKET VALUE: | £618m | |
| TOUCH: | 101-102p | 12-MONTH HIGH: | 159p | LOW: 81p |
| DIVIDEND YIELD: | 2.2% | PE RATIO: | 36 | |
| NET ASSET VALUE: | 73¢* | NET CASH: | $168m | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2013 | 190 | 14.5 | 2.1 | 1.53 |
| 2014 | 221 | 13.9 | 1.7 | 1.68 |
| % change | +16 | -4 | -17 | +10 |
Ex-div: 6 Aug Payment: 12 Sep *Includes intangible assets of $234m, or 38¢ a share £1=$1.69 | ||||
