Spectris raises the axe

Project Uplift has now landed and Spectris is targeting over £30m in annualised benefits, with £15m-£20m expected in 2019. Chief executive Andrew Heath has broken the programme down into four pillars: people, product, process and portfolio. “We have initially a focus on gross margin improvement,” Mr Heath says. “We’re rationalising the product portfolio across a number of the operating companies, exiting lower margin products. Some of that hasn’t been done for a while,” he adds. Headcount will be reduced and some of Spectris’ back-office operations will be relocated to “lower-cost geographies”.

Spectris has earmarked three of its businesses upon which the company will build its platform: science instrumentation business Malvern Panalytical, testing and measurement specialist HBK and Omega Engineering, which sells measuring equipment for a range of variables that includes temperature and humidity. These businesses generated more than 60 per cent of Spectris’ revenues last year. The future of the group’s remaining businesses are under review, and those deemed unsuitable for Spectris’ future may be disposed of. Management largely attributes a 22 per cent fall in pre-tax profits to a higher level of disposals in 2017, when it pocketed £101m compared with £56.3m in 2018. 

The group plans to take all of its restructuring costs below the line from 2019, which management says “gives you a far more meaningful assessment of underlying trading performance”. The profit improvement programme will incur charges of around £35m over 2018 and 2019. 

Analysts at broker Stifel forecast earnings per share of 173p for the year to December 2019, up from 154p in the prior year.