21 November 2017 – Spectris plc (SXS: LSE), the productivity-enhancing instrumentation and controls company, issues a trading update covering the period from 1 July to 31 October 2017 (‘the period’).
Reported sales for the four months to end October increased by 9% when compared to the corresponding period in the previous year. Group like-for-like1(‘LFL’) sales increased 7%, whilst acquisitions, net of disposals, contributed 2% to sales growth and foreign currency had a marginally positive impact. For the ten-month period 1 January to 31 October, LFL sales rose 6%.
LFL sales grew in all key regions during the four-month period with particularly good growth in Asia, led by strong demand in China. The performance in North America improved markedly since the first half of the year, while Europe continued to perform in line with the first half. LFL sales declined marginally in the Rest of the World.
LFL sales increased across all four of the Group’s business segments. In regard to end markets, there was notable LFL sales growth in automotive, electronics, semiconductors and telecoms and metals, minerals and mining, while academic research continued to see a LFL sales decline in the period.
|Sales by geography||LFL sales change
4 mths Jul-Oct
|Sales by segment||LFL sales change
4 mths Jul-Oct
|North America||4%||Materials Analysis||6%|
|Europe||7%||Test and Measurement||7%|
|Rest of the World||-1%||Industrial Controls||6%|
During the period, we completed the acquisition of privately-held US company, The Omnicon Group, Inc. (‘Omnicon’) for an initial consideration of $29 million, plus a performance-related deferred consideration of up to $7 million. Omnicon provides a range of services to help its customers analyse and improve product reliability and safety and is being integrated alongside our Prenscia software business within the Test and Measurement segment. Omnicon complements the existing capability of our reliability and durability software and services portfolio and provides strong geographic growth opportunities across the joint customer base.
In October, the divestment of Microscan was completed with net cash proceeds received of £113 million, before tax of approximately £20 million which is due to be paid in December 2017. As previously stated, the sale of Microscan lowers 2017 adjusted earnings per share by approximately 2 pence.
Following the sale of Microscan, net debt was £26.6 million at 31 October, before the outflow of the Group’s £23 million dividend payment in November. The Group continues to be highly cash generative and maintains a strong financial position.
The Project Uplift initiatives continue and the Group still expects a net cost in 2017 of £14 million for Phase 1, although both gross benefits and costs will be lower than previously anticipated. In addition, there is £1 million spend on the Phase 2 shared service centre project, as previously guided. To focus on delivery of the Phase 1 initiatives, we have decided to re-phase the detailed design and implementation planning stage of the shared service centre project. As a result, further details of the costs and benefits of Phase 2 will be provided later in 2018.
SUMMARY AND OUTLOOK
Commenting on trading, John O’Higgins, Chief Executive, said: “Trading conditions in the period have been positive and we are encouraged by the improving backdrop in North America. As highlighted at the first-half results, we have continued to make targeted investments to support our growth strategy, which have increased our overhead costs this year as anticipated. Our outlook for the full year remains unchanged.”
A conference call for analysts and investors will be hosted by John O’Higgins and Clive Watson, Group Finance Director, at 08.00 today to discuss this statement.
To access the call, please dial +44 (0) 33 3300 0804, toll free 0800 358 9473 – Pin code: 48741425#. Or for replay, please dial +44 (0) 33 3300 0819, toll free 0800 358 2049 – Pin code: 301209999#.
Spectris will publish its preliminary results for the year ending 31 December 2017 on 19 February 2018.
1 At constant exchange rates and excluding acquisitions
– ENDS –
John O’Higgins, Chief Executive
+44 1784 470470
Clive Watson, Group Finance Director
+44 1784 470470
Siobhán Andrews, Head of Corporate Affairs
+44 1784 470470
Richard Mountain / Susanne Yule
+44 203 727 1374
Spectris plc is a leading supplier of productivity-enhancing instrumentation and controls. The Company’s products and technologies help customers to improve product quality and performance, improve core manufacturing processes, reduce downtime and wastage and reduce time to market. Its global customer base spans a diverse range of end user markets. Spectris operates across four business segments which reflect the applications and industries it serves: Materials Analysis, Test and Measurement, In-line Instrumentation and Industrial Controls. Headquartered in Egham, Surrey, United Kingdom, the Company employs approximately 9,000 people located in more than 30 countries. For more information, visit www.spectris.com.