Spectris reports record profits but sales fall short of forecasts

Precision instrumentation and controls company Spectris reported record adjusted profits for 2023 on the back of double-digit sales growth and improving margins, though sales came in slightly below forecasts.

Reported pre-tax profit for the full year totalled £263.6m, up 20% on 2022, helped by a 130 basis-point increase in the operating margin to 18.1%.

Adjusted operating profits were up 18% over the year at an all-time high of £262.5m.

Sales were up 9% over the year at £1.45bn, short of the company-compiled consensus forecast of £1.47bn.

Full-year like-for-like sales increased by 10% as strong double-digit growth in the electronics and semiconductor, materials and academic research offset a 9% drop in life sciences and pharmaceuticals, its biggest division.

"The combination of the improved quality of the group, our strong self-help story and the significant opportunities that lie ahead gives me great confidence in our future prospects, with the delivery of further margin expansion in 2024 providing another step towards margins in excess of 20%," said chief executive Andrew Heath.

The company said progress in 2024 was expected to be weighted towards the second half due to the strong performance in the first half of 2023 and an improving outlook in a number of key end markets.

Commenting on the results, analysts at Shore Capital said they were placing their 'buy' recommendation on Spectris under review, "noting the uncertain short-term outlook and the lack of a clear catalyst" following the completion of the company's portfolio rationalisation with the sale of the Red Lion Controls business in December.

The broker said the stock's valuation was "now appearing to be relatively full".