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.
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