Spectris' sales rise but low demand affects Europe, North America

Spectris, a supplier of precision instrumentation and controls, reported like-for-like sales in the third quarter continued to be affected by headwinds in Europe and North America from weak demand and low oil prices.

Sales increased by 18% in the four months to end October, with 4% from acquisitions and 18% from foreign currency exchange movements positively impacted revenues.

Like-for-like sales declined by 4% in the quarter and by the same amount for the 10 months of the year to date.

LFL sales grew in Asia Pacific and the rest of the world, but declined in Europe and North America. Europe has improved moderately since the first half of the year while North America has further deteriorated.

The Materials Analysis business delivered positive LFL sales growth in the period, whilst LFL sales fell in the other three segments.

Chief executive John O'Higgins said that trading conditions in the period have marginally deteriorated, particularly in North America, due to weak industrial demand.

“However, this is offset by further strategic progress on acquisitions and by the impact of foreign currency exchange movements. Accordingly, we expect the full year adjusted operating profit to be in line with current market expectations."

In light of the challenging trading conditions, particularly in North America, and the weakness in the oil and gas market, the company said it is to review the balance sheet goodwill associated with the ESG Solutions and Omega Engineering businesses, which is likely to lead to a non-cash impairment charge.

To also mitigate against the adverse trading environment it made £10m worth of costs savings for the year and made planed various productivity improvement initiatives including ‘Project Uplift’.

In September it bought Millbrook Group, a test, validation and engineering service, for £122m, to combine solutions encompassing hardware, software and services.

Following the acquisition, at the end of October, net debt was £180m and the company is “highly cash generative and maintains a strong financial position”.

Shares in Spectris were down 1.07% to 2,033p at 0913 GMT.