Spectris profit rises but sketchy Uplift update disappoints

Spectris shares fell after the precision instruments maker flagged up slowing sales growth and left investors guessing about the next phase of a delayed efficiency drive.

Announcing half-year results, Spectris said its Project Uplift programme was on track for £3m of net gains in the current financial year. But it failed to publish hoped-for details of the plan’s next stage.

Adjusted pre-tax profit for the six months to the end of June rose 6% to £67.4m as sales rose 3% to £728m, driven by demand from automotive and pharmaceuticals companies. Organic sales growth was 5% but the company said it was unlikely to maintain that rate of increase.

Chief executive John O’Higgins, who is leaving the company, said: “Our performance in the first half of the year reflects good demand in our end markets. We are pleased to see 5% organic sales growth although we continue to expect that pace to ease a little in the second half, given the tougher comparator with 2017. “

O’Higgins left guidance for the full-year unchanged. Spectris shares fell 6.7% to £24.26 at 09:38 BST.

Spectris said in February that Project Upflift would be delayed because of an IT upgrade. With its results the company said plans were on track and that it had consolidated spending and changed suppliers for travel and some products. It said plans for a shared service centre would emerge in the second half.

Shore Capital analyst Ben McSkelly, who has a ‘buy’ rating on Spectris shares, said: “We were hoping for concrete details of the resumption of phase 2 of Uplift at this stage. However, these details are now expected later in the year.

"At first glance, this is slightly disappointing. Our forecasts include broad assumptions for the costs and benefits of phase 2 and this uncertainty will now persist for longer.”

A 0.4% increase to 6.3% for Spectris’s operating margin was also disappointing, McSkelly said.