REG - Spectris PLC - Q1 2024 trading update

SpectrisAnnouncement

02/05/2024 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240502:nRSB9183Ma&default-theme=true

RNS Number : 9183M  Spectris PLC  02 May 2024

Q1 2024 trading update

2 May 2024 - Spectris plc (SXS: LSE), the expert in providing insight through
precision measurement, provides a trading update for the three-month period to
31 March 2024 ('the period').

 

A solid start to 2024

·      While the first quarter was slightly softer than anticipated, our
expectation for the full year remains unchanged

·      Sales in the first quarter were lower than the very strong
comparative period 1 :

o  Sales 8% lower on a like-for-like (LFL) basis

o  Order book 2  at the end of the quarter at £534.2 million was 3% higher
than year-end (31 December 2023: £517.6 million)

o  Book to bill of 1.07x providing good levels of cover within our expected
range of 4-5 months

·      Successful rollout of our new ERP system across Malvern
Panalytical globally in April

·      Strong balance sheet continues to provide capital allocation
optionality:

o  Net cash of £109 million at period end with completion of Red Lion sale
on 1 April generating net proceeds of £228 million

o  Investing for growth through:

§ increased R&D, with a number of new products launched

§ encouraging M&A pipeline to compound growth

o  Completion of first £50 million tranche of £150 million share buyback
programme shortly after period end

·      We expect to deliver another year of progress in 2024, including
margin expansion, after taking into account the impact of the Red Lion
disposal.  Progress is expected to be weighted towards the second half
reflecting the strong performance of the Group in the first half of 2023 and
an improving outlook in a number of key end markets.

 

Andrew Heath, Chief Executive, said:

"The first quarter of 2024 has been another productive period for the Group.
We've successfully implemented the initial rollout of our new ERP system,
launched a number of new, market-leading products and completed the sale of
Red Lion, which represents the end of our portfolio rationalisation programme.

Our strong balance sheet provides significant flexibility for continued
investment in growth including an encouraging M&A pipeline.  And our
increased investment in R&D is driving an accelerated cadence of new
product launches which we expect to continue throughout 2024.

While conditions in some of our end markets were softer than expected in the
first quarter, notably China, we continue to expect to deliver progress this
year as markets improve, with progress weighted towards the second half.  As
a higher quality, more resilient business, facing off to attractive markets,
we are well placed to deliver continued organic growth, expand operating
margins towards our target of 20%+ and compound growth through M&A."

 

Quarterly Group sales

             2022                        2023                        2024
 £ million   Q1     Q2     Q3     Q4     Q1     Q2     Q3     Q4     Q1
 Sales       264.9  305.3  332.6  424.6  354.3  348.2  349.1  397.6  309.4
 LFL growth  12%    9%     10%    21%    24%    15%    11%    -3%    -8%

 

Sales by geography and division - LFL growth vs Q1 2023

                      Q1                       Q1
 Spectris Scientific  -6%   North America      -7%
 Spectris Dynamics    -10%  Europe             -7%
 Other                -13%  Asia               -11%
                            Rest of the World  -6%
 Total sales          -8%                      -8%

 

Group LFL sales were 8% lower on a LFL basis compared with a very strong
comparative period in 2023.  Adverse currency exchange impact reduced sales
by 4%, which together with the net negative impact of 1% from disposals, net
of acquisitions, resulted in sales being 13% lower on a reported basis at
£309.4 million (Q1 2023: £354.3 million).

·    In Spectris Scientific, sales were 6% lower on a LFL basis driven by
pharma/life sciences and academia, against a strong first quarter last year
where sales were up 26%.  Regionally, sales growth in North America and the
Rest of the World were more than offset by lower sales in Asia, notably
China.  In both primary and advanced materials, the demand pipeline remains
positive with softer conditions in batteries being offset by chemicals and
coatings. Pharma/life sciences remains broadly flat, with lower demand being
seen in academia, although the recent release of government stimulus in China
should see this progressively recover through the year.  We continue to
expect demand to return to solid growth in semiconductor in the second half.
 

 

·    In Spectris Dynamics, LFL sales were 10% lower against a strong first
quarter in 2023, where sales were up 21%, driven by machine manufacturing and
automotive end markets and on a regional basis, China.  We continue to see
strong demand in A&D and good growth in automotive offset by continued
weakness in machine manufacturing.

 

Strong balance sheet continues to provide opportunities to invest for growth

·    At the end of March, the Group had net cash of £109.0 million
(£138.8 million at 31 December 2023), with the completion of the sale of Red
Lion on 1 April generating net proceeds of £228 million, leaving the Group
well positioned to continue to invest in growth including significant capacity
for M&A aligned to the Group's strategy

·    Significant new products launched in the period included:

o  the Mastersizer 3000+, a revolutionary step in particle sizing with
artificial intelligence-driven solutions for data evaluation providing robust
and confident results in what is our best-selling, market leading, laser
diffraction instrument; and

o  the Revontium X-ray fluorescence analyser representing a huge step in
elemental analysis providing the same data quality as floor-standing
instruments at a fraction of the operating cost in certain applications

·    On 25 April, we completed a minority investment in Dimer Instruments
to support the development of protein screening technology to assist in drug
discovery

·    We have completed the first £50 million tranche of our £150 million
share buyback programme with the remainder expected to be completed by the end
of the year

 

Outlook for 2024

·    The Group's resilience, leading product portfolio and broad end
market exposure, combined with a strong self-help story, provides confidence
in the Group's ability to navigate an uncertain macroeconomic environment this
year

·    We expect to deliver another year of progress in 2024, including
margin expansion, after taking into account the impact of the Red Lion
disposal.  Progress is expected to be weighted towards the second half
reflecting the strong performance of the Group in the first half of 2023 and
an improving outlook in a number of key end markets

 

END

 

Conference call

A conference call for analysts and investors will be hosted by Andrew Heath,
Chief Executive, and Derek Harding, Chief Financial Officer, at 08.30 BST
today to discuss this statement.

To access the call, please dial +44 (0) 20 3936 2999, toll free 0800 358 1035
- Participant code: 203235. Or for replay, please dial +44 (0) 20 3936 3001 -
Participant code: 769070.

Spectris will publish its half-year results for 2024 on Tuesday 30 July.

 

For and on behalf of Spectris plc

LEI Number: 213800Z4CO2CZO3M3T10

 

 

 

Contacts:

Spectris plc

Mathew Wootton

Investor Relations Director

+44 7500 078880

Teneo

Martin Robinson/Giles Kernick

+44 20 7353 4200

 

About Spectris

Spectris combines precision with purpose, delivering progress for a more
sustainable world. We provide critical insights to our customers through
premium precision measurement solutions combined with technical expertise and
deep domain knowledge. Precision is at the heart of what we do - our leading,
high-tech instruments and software equip our customers to solve some of their
greatest challenges to make the world cleaner, healthier and more productive.
We are focused on two key divisions - Spectris Scientific and Spectris
Dynamics, which are placed in technology-driven end markets, with strong
fundamentals and attractive growth trajectories. We have leading market
positions in premium segments and employ 7,600 people located in more than 30
countries, all united behind our purpose to deliver value beyond measure for
all our stakeholders. For more information, visit www.spectris.com
(http://www.spectris.com) .

Red Lion quarterly contribution

 £ million                  Q1 2024
 Sales                      20.3
 Adjusted operating profit  3.7

 

 

 

 1  Q1 LFL sales growth of 24% in 2023

 2  Order book excluding Red Lion

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  TSTFFFELERILIIS