You need to look at these half-year figures for Spectris (SXS) with an eye to the future. The instrumentation and controls specialist delivered passable like-for-like numbers, albeit against a fairly drab 2016 half-year, but there were some genuinely encouraging signs from a number of the group’s locales and the benefits accruing from the 'Project Uplift' productivity programme won’t become fully apparent until 2018.
The group made significant progress towards converging its IT systems through the period. This involved the establishment of an IT shared service organisation, while contract terms with a number of vendors have been improved. Spectris is on track to deliver £6m in cost savings through 2017 at a one-off cost of £20m.
Disregard the effects of acquisitions, currency translations and 'Uplift' costs, and adjusted operating profit was 3 per cent down at £66.5m. The decline, although partly linked to restructuring activity, was largely attributable to the in line instrumentation business where adjusted operating profit contracted by a fifth due to one-off costs and a changing mix despite an 11 per cent rise in revenue.
However, management was encouraged by a return to sales growth in the North American markets, while a step-up in export demand for the German automotive industry and growing activity in the mining industry should bolster the top line through the remainder of 2017.
Jefferies increased its forecasts marginally, giving pre-tax profit of £203m for the December 2017 year-end, with EPS of 132p, against £196m and 127p in 2016.
| SPECTRIS (SXS) | ||||
| ORD PRICE: | 2,580p | MARKET VALUE: | £3.08bn | |
| TOUCH: | 2,561-2,580p | 12-MONTH HIGH: | 2,869p | LOW: 1,840p |
| DIVIDEND YIELD: | 2.1% | PE RATIO: | 274 | |
| NET ASSET VALUE: | 879p* | NET DEBT: | 15% | |
| Half-year to | Turnover | Pre-tax | Earnings per | Dividend |
| 30 Jun | (£m) | profit (£m) | share (p) | per share (p) |
| 2016 | 581 | 41.0 | 26.0 | 18.0 |
| 2017 | 710 | 37.6 | 26.8 | 19.0 |
| % change | +22 | -8 | +3 | 6 |
| Ex-div: | 12 Oct | |||
| Payment: | 10 Nov | |||
| *Includes intangible assets of £871m, 731p a share | ||||
