Spectris struggles with currency and acquisition costs
Productivity-enhancing instrumentation and controls company Spectris announced its full year results for the 12 months to 31 December on Tuesday, with 13% growth in reported sales to £1.35bn.
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The FTSE 250 firm said at constant exchange rates, that growth was just 1%, while it saw a 2% sales decline on a like-for-like basis.
Adjusted operating margins were broadly stable, the board said, with a strong operating cash conversion of 113%.
Spectris’ adjusted operating profit improved 11% to £200.8m through the year, though that was a 2% decline at constant exchange rates and an 11% drop on a like-for-like basis.
Adjusted earnings per share were up 12% to 127.5p, and the company said its dividend per share increased by 5% at year-end, to 52p.
Reported operating profit was down 73% to £38.3m, while basic earnings per share were off 91% at 8.6p.
The board said that reported profit included a non-cash charge of £115m relating to an impairment of goodwill and other intangibles at Omega Engineering and ESG Solutions, reducing earnings per share by 96.8p.
It claimed to have made “good strategic progress” in its transition to a customer-focused, solutions strategy with the acquisition of Millbrook bringing a “high quality” test service platform, expanding its automotive offering.
Spectric said it also added further software, service and testing capability during the year, and the merger of Malvern and PANalytical was set to deliver a “more complete range” to a broader set of markets and customers.
The board’s “Project Uplift” further supported the delivery of its strategy, and was expected to deliver £35m of recurring savings at a cost of £45m over the period to end 2019, with a net profit and loss charge of £14m in 2017.
“The year ended well with like-for-like sales growth in the final quarter following challenging trading conditions in the first three quarters,” commented chief executive John O'Higgins.
“We continue to make good strategic progress as we transition our customer offering from the supply of products towards the provision of solutions encompassing hardware, software and services, responding to our customer's needs.
“As customers increasingly require an integrated solution, we are strategically positioning Spectris to align with their needs and this is transforming our business.”
O’Higgins said the company added further software and service capability to the group in the acquisitions it made during the year, with the most significant being Millbrook.
“We also took the decision to merge two of our larger operating companies, Malvern Instruments and PANalytical, enabling a more collaborative approach across the customers served by both companies.”
The company also launched Project Uplift, which O’Higgins said was a key enabler in the delivery of its strategy, aimed at reducing complexity, increasing efficiency and effectiveness and freeing up resources to stimulate growth.
“End-market growth in the near-term is expected to be modest.
“However, the evolution now underway within Spectris is an exciting time for the business and will further enable and support delivery of our solutions strategy.”