First-half profits rise at expanding Spirent

The FTSE 250 company said that growth was driven by continued strong demand for its lab and live assurance solutions, and its 5G device test solutions.

It reported “strong growth” in its order book for the six month period ended 30 June, as its book-to-bill was 103, while visibility also improved into future years as more multi-year contracts were secured.

Adjusted operating profit grew 13% to $44.7m, with the firm describing its operating margin as “strong” at 17.5%, up one percentage point year-on-year, while its adjusted profit before tax increased by 12%.

Spirent recorded a reported profit before tax of $34.8m after acquisition-related items of $6.3m, compared to $36m in the first half of 2020, where acquisition items were nil.

The board hiked the interim dividend by 10%, to 2.39 cents per share.

Cash closed at $156.4m, following the payment of $51.3m for the acquisition of octoScope, the $45.6m special dividend and the $23.5m ordinary dividend in the first half.

“We achieved strong growth in orders, revenue, and profit, with progress across the portfolio,” said chief executive officer Eric Updyke.

“Our key focus on moving into the live network and increasing our services and managed solutions is proving highly effective, and alongside 5G, an enduring growth driver for Spirent, continues at pace at a time when remote connectivity is critical.

“We are solving business challenges for our growing customer base as the need for assurance increases.”

Updyke said the company also started its targeted mergers and acquisitions approach, and in March acquired octoScope, making Spirent “the firm leader” for Wi-Fi testing in a growing market.

He added that the company received “good” customer reaction, with integration plans on track.

“We continue to increase our order book and multi-year wins, and therefore visibility.

“We enter the second half with growing optimism and a strong financial platform, which affords us great flexibility to grow our business both organically and via further targeted M&A.

“We will continue to manage through the Covid-19 crisis and execute on our strategy with a relentless focus on customer centricity, innovation for growth and operational excellence.”

At 0941 BST, shares in Spirent communications were up 3.72% at 264.48p.