Spectris to miss full-year profit expectations as trading weakens - UPDATE
Electrical engineering firm Spectris has warned that its full-year operating profit will be "modestly below" market expectations of £200m due to little improvement in the economic conditions of its main geographies.
Spectris
3,256.00p
16:35 23/04/24
Investec analysts, however, said the warning was less severe than they had anticipated, adding that the results and outlook were probably better than expected after a 16% underperformance in the second quarter of 2014.
The company said sales in its third quarter to end 30 September dropped by 5% compared to the same period let year as growth of 2% from acquisitions was offset by foreign currency exchange movements, which had a negative effect of 7%.
Like-for-like sales increased 7% in North America but fell 3% in Asia Pacific and 6% in Europe thanks to a continued weakening in Eurozone economies like Germany, Spectris revealed.
Growth in the test and measurement, in-line instrumentation and industrial controls segments counteracted a sales decline in the materials analysis segment.
Sales to the automotive and energy and utilities markets showed positive growth; however, Spectris also revealed that sales to the pulp and paper industry were lower, particularly in Asia.
Within the Materials Analysis segment, the metals, minerals, mining and academic research sectors remained weak, although the company claimed it has recently seen demand improve from customers in these markets.
Spectris recorded net debt at 30 September of around £119.8m, an increase of £15.7m from the start of the year, after several acquisitions.
According to Investec analyst Michael Blogg: "The group will weather the storm of poor demand in reasonably good shape, with its lowly-geared balance sheet leaving plenty of scope for investment in innovation, marketing initiatives and potentially further earnings-enhancing acquisitions."
In spite of the low expectations, shares in Spectris were trading up 4.32% at 1,716.00p at 15:32 on Friday. The stock is still down by around a third since the start of 2014.