Favourable exchange rates and acquisitions flattered Spectris ' sales growth as the economic downturn hit trading. Strip-out the currency boost and sales at the industrial controls and testing business fell by a massive 20 per cent.
Chief executive John O'Higgins said the deterioration in trading had hit its mining customers hardest, which have been cutting capital expenditure after the commodity boom of 2007. Spectris also saw sales from automotive customers drop after manufacturers cut production following falling new car demand - that hit its Japanese business hard, where Toyota and Nissan are major customers.
However, demand from research and development-focused buyers remained steady, while sales to non-automotive transportation customers - including aerospace and rail - were also strong. Mr O'Higgins said that, although the market was still "fairly fragile", and that it was too early to confirm any significant recovery, trading had stabilised after the deterioration in the first quarter. The company has reduced costs in line with demand, and expects to cut headcount by 10 per cent by the year-end. "We want to remain on the right side of the cost equation," said Mr O'Higgins. The company's broadened restructuring programme is expected to cover its £14m cost in 2009 and generate savings of nearly £30m next year.
Broker UBS expects underlying full-year pre-tax profits of £52.1m and EPS of 33.6p (£106.1m and 69.8p in 2008).
| SPECTRIS (SXS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 654p | MARKET VALUE: | £755m | |
| TOUCH: | 654-656p | 12-MONTH HIGH: | 850p | LOW: 377p |
| DIVIDEND YIELD: | 3.6% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 332p* | NET DEBT: | 47% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 359 | 39.1 | 23.5 | 6.40 |
| 2009 | 372 | 8.60 | 6.50 | 6.40 |
| % change | +4 | -78 | -72 | - |
Ex-div: 21 Oct Payment: 13 Nov *Includes intangible assets of £378m, or 327p a share | ||||
