25/05/2018
25 May 2018 – Spectris plc (SXS: LSE), the productivity-enhancing instrumentation and controls company, issues a trading update covering the four months to 30 April 2018 (‘the period’).
TRADING UPDATE
Group like-for-like1 (‘LFL’) sales increased by 6%, whilst growth from acquisitions, net of disposals, contributed a further 1%. Foreign currency exchange movements reduced sales by 5%, resulting in a 2% increase in reported sales in the period.
LFL sales increased in North America, Europe and Asia, with notably strong growth in China and in the UK, led by strong demand for Millbrook’s test services. All segments delivered LFL sales growth in the period, except In-line Instrumentation which declined against a strong comparator last year. From an end market perspective, the growth was led by sales to the pharmaceutical and automotive industries.
The Group continues to be highly cash generative and maintains a strong financial position. Net debt at the end of April was £217 million, an increase of £167 million in the period, primarily reflecting the acquisition of Concept Life Sciences in January, the Group’s capital expenditure programme and ongoing spend on the £100 million share buyback programme. As of 24 May, the Group has bought back 661,807 shares for a total cost of £17.9 million.
The disposal of EMS Brüel & Kjær (‘EMS B&K’), the environmental monitoring business, into a joint venture with Macquarie Capital is expected to complete at the end of May for a total cash consideration of around £43 million to the Group. Post completion, the Group’s share of post-tax income will be recorded as a single-line item in the income statement. In 2017, EMS B&K reported sales of £25 million and adjusted operating profit of £6.3 million.
STRATEGY UPDATE
We continue to focus on transitioning our customer offering towards the provision of solutions in order to provide a fully integrated offering and differentiated value to our customers. The acquisition of Concept Life Sciences in the period was a key step forward in this strategy, adding services to our Materials Analysis segment where it has strong synergies with Malvern Panalytical. In automotive, the acquisition of Revolutionary Engineering in the USA complements the existing test capabilities of Millbrook as well as extending its reach into new geographies and its capabilities in automotive testing systems.
We also announced in April that Brüel & Kjær Sound & Vibration (‘BKSV’) and HBM, the two largest operating companies within our Test and Measurement segment, will be merging their activities from 1 January 2019, with some one-off merger-related costs being incurred in 2018. This will create a new business, HBK (Hottinger, Brüel & Kjær), which leverages the strengths and complementary expertise of BKSV and HBM across the measurement chain to enhance our customer proposition.
The Project Uplift initiatives are progressing as planned and work continues on the detailed validation and design phase for the shared service centre programme for Phase 2, with further detail to be provided in the second half of the year.
SUMMARY AND OUTLOOK
Commenting on trading, John O’Higgins, Chief Executive, said: “Performance in the year to date shows a continuation of the strength in our end markets experienced in 2017, partly offset by adverse foreign currency exchange impact. Performance remains consistent with our expectations for the full year, although noting that visibility on our order book remains limited. We are pleased with the strategic developments we continue to make which further expand our services capabilities and foster increased collaboration between our operating companies as we continue to focus on the provision of complete solutions for our customers.”
CONFERENCE CALL
A conference call for analysts and investors will be hosted by John O’Higgins, Chief Executive, and Clive Watson, Group Finance Director, at 08.00 today to discuss this statement.
To access the call, please dial +44 (0) 333 300 0804, toll free 0800 358 9473 – Pin code: 64663274#.
Or for replay, please dial +44 (0) 333 300 0819, toll free 0800 358 2049 – Pin code: 301231836#.
Spectris will publish its half-year results for the six months ending 30 June 2018 on 24 July 2018.
1 At constant exchange rates and presenting the impact of acquisitions and disposals on a comparable basis
Contacts:
Spectris plc
John O’Higgins, Chief Executive
+44 1784 470470
Clive Watson, Group Finance Director
+44 1784 470470
Siobhán Andrews, Head of Corporate Affairs
+44 1784 485325
FTI Consulting
Richard Mountain / Susanne Yule
+44 203 727 1374
ABOUT SPECTRIS
Spectris plc is a leading supplier of productivity-enhancing instrumentation and controls. The Company’s products, technologies and services 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 9,800 people located in more than 30 countries. For more information, visit www.spectris.com.