TIDMSXS
RNS Number : 8309H
Spectris PLC
20 November 2018
SPECTRIS PLC
TRADING UPDATE
20 November 2018 - Spectris plc (SXS: LSE), the
productivity-enhancing instrumentation and controls company, issues
this trading update covering the period from 1 July to 31 October
2018 ('the period').
HIGHLIGHTS
-- Strong trading in the period with 8% like-for-like(1) sales growth
-- Full-year 2018 performance anticipated to be in line with our expectations
-- Project Uplift Phase 1 on track; decision taken not to
proceed with global shared services centre
-- Further cost reduction programme commenced - more disciplined
approach to improve operating margins
-- Strategic review initiated - focused on asset optimisation,
capital allocation and portfolio composition
TRADING
Reported sales in the period increased 9% compared to the
corresponding period in the previous year. Group like-for-like(1)
('LFL') sales increased 8%, whilst acquisitions, net of disposals,
contributed 2% to sales growth and foreign currency movements had a
negative 1% impact. For the ten-month period from 1 January to 31
October, LFL sales rose 6% and reported sales increased 5%.
LFL sales change LFL sales change
Sales by geography 4 mths Jul-Oct Sales by segment 4 mths Jul-Oct
North America 6% Materials Analysis 12%
----------------- ------------------------ -----------------
Europe 2% Test and Measurement 6%
----------------- ------------------------ -----------------
Asia 16% In-line Instrumentation 8%
----------------- ------------------------ -----------------
Rest of the World 7% Industrial Controls 2%
----------------- ------------------------ -----------------
LFL sales grew in all regions during the period with
particularly good growth in Asia, led by strong demand in China and
Japan. The performance in North America was similar to that in the
first half of the year, while growth in Europe moderated from the
first half, though growth in orders improved.
In our end markets, there was notable LFL sales growth to
pharmaceutical, automotive and semiconductor customers, as well as
academic research, which recovered from a weak first half.
LFL sales increased across all four of the Group's business
segments, particularly in the Materials Analysis segment, driven by
the strong growth in the pharmaceutical and semiconductor
industries. LFL sales growth in Test and Measurement was similar to
the first half. After a tough comparator in the first half,
In-line Instrumentation posted 8% growth, with notably strong
demand in Asia. Industrial Controls saw growth moderate in the
period, though the order book remains robust.
Performance at Concept Life Sciences, which was acquired in
January, has been below expectations and remedial action is being
taken to improve operational effectiveness. Stronger growth at the
other two operating companies in the Materials Analysis segment has
more than offset the shortfall in expected profitability.
1 At constant exchange rates, and including the impact of
acquisitions and disposals on a comparable basis
SHARE BUYBACK
During the period, the Group completed its GBP100 million share
buyback programme.
PROJECT UPLIFT
Phase 1 of Project Uplift is on track to deliver the expected
benefits, as previously disclosed. The study on the shared services
centre project has now been completed and a decision has been taken
not to proceed with a global shared services centre model, given
the cost of implementation versus the speed of returns. Instead, we
will be implementing a more comprehensive cost reduction programme
in 2019.
OUTLOOK
We expect full-year adjusted operating profit to be in line with
our expectations.
Andrew Heath, Chief Executive, said:
"Since becoming Chief Executive at the end of September, I have
visited the key locations and regions for each of our 14 operating
companies, meeting the leadership teams and many of our people in
the process. I am pleased by what I have seen.
"Spectris serves a diverse set of end markets with a number of
high-quality businesses which have strongly-recognised brands in
the target market segments they serve. It is clear we have
high-quality technologies, strong market positions and customer
relationships, as well as talented people. The Group has good cash
flow generation and a robust balance sheet, and we will continue to
reinforce and build on these strengths in our businesses. It is
pleasing that we have continued to deliver good organic growth in
the period.
"However, there are significant opportunities to improve the
operational performance of the Group by taking a more focused
approach. There are a number of self-help measures we can
undertake. We have strong gross margin businesses, but our
operating margin performance remains below both historic highs and
that of our peers. Consequently, we are commencing a cost reduction
programme across the Group to be more efficient in delivering
greater operational gearing in 2019 and beyond.
"In addition, we need a sharper focus on asset optimisation,
capital allocation discipline and portfolio composition. We have
therefore commenced a strategic review, which will explore the
potential to reduce complexity and establish a more focused
organisation targeting higher growth markets where we have a
competitive advantage. The explicit objective is to develop and
execute our strategy for profitable growth, as the basis for
delivering a significant and sustainable increase in shareholder
value.
"I am excited to join the Group at this time and help deliver on
the clear potential that exists to drive enhanced shareholder
value. I look forward to discussing the future of Spectris and
giving greater detail around our strategic and cost initiatives at
our full-year results in February 2019."
CONFERENCE CALL
A conference call for analysts and investors will be hosted by
Andrew Heath 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: 83325738#.
Or for replay, please dial +44 (0) 333 300 0819, toll free 0800
358 2049 - Pin code: 301259014#.
- ENDS -
Contacts:
Spectris plc
Andrew Heath, 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
10,000 people located in more than 30 countries. For more
information, visit www.spectris.com.
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END
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