TIDMSXS
RNS Number : 7399P
Spectris PLC
21 October 2021
Q3 trading update
21 October 2021 - Spectris plc (SXS: LSE), the expert in
providing insight through precision measurement, provides a trading
update for the three-month period to 30 September 2021 ('the
period').
Solid third quarter trading underpins full-year guidance and
provides momentum into 2022
-- Order book strengthens - up 31% [1] in the period, 21%(1)
year to date; supports previous full-year outlook and provides good
momentum going into 2022
-- Sales growth continues - up 12%(1) in the period, 13%(1) year
to date
-- Supply chain constraining our ability to translate the order
book to revenue in the short-term, however, on track to deliver LFL
sales growth for the full year of 10-12%, as previously guided
-- Strong balance sheet, with net cash of GBP58.0 million
-- Divestment of NDC Technologies on track to complete in fourth
quarter
-- Ambitious net zero targets validated by the Science Based
Targets initiative
Andrew Heath, Chief Executive, said :
"We delivered a solid trading performance in the third quarter,
consistent with our expectations at the half year, thanks to the
great support and engagement of our people. Our continued focus on
supporting our customers and the positive impact of new product
launches has driven demand ahead of the strong recovery in our
target end markets. As anticipated, the supply chain is now
constraining our ability to translate our very strong order intake
to revenue, however, our full year guidance of 10-12% sales growth
is maintained. The strength of our order book supports our previous
outlook for the year and provides further momentum heading into
2022.
"Alongside our focus on driving growth and margin expansion, we
continue to embed our sustainability commitments across our
operations. In July, we announced comprehensive and ambitious net
zero plans, which have now been validated by t he Science Based
Targets initiative. This is aligned to our purpose of making the
world cleaner, healthier and more productive, through our own
operations and in the innovation we are bringing to customers
through our specialist products and solutions."
Update on trading
Group like-for-like ('LFL')(1) sales increased 12% year-on-year
in the period and were 2% higher than in 2019, on a LFL basis.
Year-to-date, LFL sales were 13% higher and compared to the
corresponding period in 2019, were only 1% lower.
Reported sales in the period decreased 1% to GBP324.7 million
with disposals, net of acquisitions, reducing sales by 7% and a 5%
negative foreign currency exchange impact. For the nine-month
period, reported sales were broadly flat at GBP926.5 million, with
a 7% reduction from disposals, net of acquisitions, and a 5%
negative foreign currency exchange impact.
Our order book continued to see strong momentum with orders
growing 31% on a LFL basis in the period, up 21% year-to-date.
Sales by geography and business - LFL growth vs 2020
Q1 Q2 Q3 9M Q1 Q2 Q3 9M
------------------ ----- --- --- --- -------------------- ---- --- --- ---
North America (2%) 20% 11% 9% Malvern Panalytical 20% 26% 10% 18%
Europe (1%) 21% 9% 9% HBK (3%) 20% 16% 11%
Asia 24% 25% 15% 21% Omega 1% 28% 11% 13%
Rest of the World (15%) 48% 4% 7% Industrial Solutions 2% 22% 9% 11%
Total sales 5% 23% 12% 13% 5% 23% 12% 13%
------------------ ----- --- --- --- -------------------- ---- --- --- ---
Total orders 5% 28% 31% 21% 5% 28% 31% 21%
------------------ ----- --- --- --- -------------------- ---- --- --- ---
LFL sales increased in all regions in the period with the
strongest performance in Asia, driven by China and South Korea. In
North America and Europe, LFL sales for the period were 11% and 9%
higher, respectively.
LFL sales grew in all end markets in the period and were
strongest into pharmaceutical, semiconductor and electronics
customers, machine building and into metals, minerals and mining.
Academia is now firmly back in positive growth territory.
Year-to-date, LFL sales were higher in all end markets except
energy and utilities, which is still lower in North America.
Encouragingly, we also saw automotive return to growth in the
period, recovering to flat year to date.
Malvern Panalytical continued to make good progress, posting a
10% LFL sales increase, with growth across all regions. Demand was
particularly strong in Asia, especially metals, mineral and mining
customers and to academic research institutes. Robust demand also
continues from pharmaceutical customers, especially into
Europe.
At HBK, LFL sales increased 16% with growth across all regions,
with notably strong growth in
North America and Europe. The automotive sector returned to
growth this quarter, with LFL sales higher in all regions,
especially Asia. Since February, orders have continued to rise
every month across our product suite. Electrification and
autonomous driving remain key trends driving the growth. Demand
from electronics customers was very strong in the period,
especially in Asia, and machine manufacturing continued to see good
growth.
Omega continues to make encouraging progress. LFL sales were 11%
higher, with a strong performance in Asia. In North America, sales
growth continues to be ahead of the market, through new product
launches and the sales channel expansion strategy, in particular
the partnership with Newark, driving market share gains.
Industrial Solutions posted a 9% LFL sales increase, with
continued strong demand from pharmaceutical and semiconductor
customers, particularly in Asia. Sales into energy and utilities
returned to growth in the period. Order growth in the period was
the strongest across the businesses.
Cash, balance sheet and M&A
The Group continues to be highly cash generative. At the end of
September, the Group had net cash of GBP58.0 million (GBP272.8
million as of 30 June 2021), following the acquisition of
Concurrent Real-Time in July. The integration of the business to
date is going well.
In August, HBK advanced its software strategy with a software
licence and asset purchase agreement with VIMANA, a provider of
software and services for smart manufacturing. The transaction
brings technology to HBK and will form the basis for a new
engineering centre of excellence focused on data management and
connectivity.
The Group completed its GBP200 million share buyback programme
on 7 October. In total,
5,596,739 ordinary shares were repurchased at an average price
of 3574 pence per share and the shares repurchased were
subsequently cancelled.
The divestment of NDC Technologies to Nordson for $180 million
(GBP130 million), remains on track for completion during the fourth
quarter. As a result of the divestment, the Group expects a
reduction in full-year 2021 sales and adjusted operating profit of
GBP15 million and GBP3 million, respectively.
Our cash position provides us with balance sheet optionality for
future acquisitions. We continue to review and renew our
opportunity pipeline to seek further suitable acquisition targets,
that are synergistic to our businesses and align with our purpose
and strategic goals.
Socially, balanced approach
Net zero targets now validated by SBTi
As announced with their publication in July, the Group's net
zero targets were submitted for verification to the Science Based
Targets initiative ('SBTi'). We were pleased to have them validated
in October and look forward to working with SBTi going forward as
we set out our performance against these targets on an annual
basis. To support this, the Group has implemented a Group-wide
energy management system to monitor and report its energy data and
is currently undertaking a series of energy efficiency audits. We
have also confirmed the Group's commitment to the Race to Zero
ahead of COP26 through signature of the 1.5-degree Business
Pledge.
Supporting our employees and communities
In recognition of World Mental Health Day, we launched our 'Be
Kind to your Mind' programme, held a series of presentations from
external experts on various aspects of mental health and leaders
across the Group came together to deliver video messages to
employees on the importance of looking after their mental
health.
During the quarter, we continued to develop our STEM ambition by
joining Young Professionals UK and taking part in various outreach
activities, including the 'tech the future' virtual work experience
event and the black heritage networking event. The Spectris
Foundation also remains on course to make its first donations
before the year end.
Guidance and outlook - full-year guidance affirmed
Against a backdrop of robust recovery in many of our end
markets, our strong LFL sales growth performance has clearly
benefited from the increased focus across the Group and the
enhancements we have made to our customer offering, including new
product and service launches, as evidenced by the strength of our
order book.
Supply chain pressures are now constraining our ability to
translate the order book into revenue in the short-term. While to
date these have had limited impact on our sales performance, we
expect to encounter increasing headwinds in the fourth quarter and,
as such, retain our guidance of 10-12% sales growth for the full
year.
Overall, the business continues to perform well and the strength
of our order book and continued strong order intake coming into the
fourth quarter supports our outlook for the rest of the year and
provides further momentum heading into 2022.
Conference call
A conference call for analysts and investors will be hosted by
Andrew Heath, Chief Executive, and
Derek Harding, Chief Financial Officer, at 08.00 today to
discuss this statement.
To access the call, please dial +44 (0) 20 3936 2999, toll free
0800 640 6441 - Participant code: 613100.
Or for replay, please dial +44 (0) 20 3936 3001 - Participant
code: 807893.
Spectris will publish its full-year results for 2021 on 24
February 2022.
For and on behalf of Spectris plc
LEI Number: 213800Z4CO2CZO3M3T10
Contacts:
Spectris plc
Siobhán Andrews
Head of Corporate Affairs
+44 20 4551 4549 /+44 7920 230093
Tulchan Communications
Martin Robinson
Suniti Chauhan
+44 20 7353 4200
About Spectris
Spectris' global group of businesses are focused on delivering
value beyond measure for all our stakeholders. We target global,
attractive and sustainable markets, where growth and high returns
are supported by long-term drivers. Precision is at the heart of
what we do. We provide customers with expert insight through our
advanced instruments and test equipment, augmented by the power of
our software and services. This equips customers with the ability
to reduce time to market, improve processes, quality and yield. In
this way, Spectris know-how creates value for our wider society, as
our customers design, develop, test and manufacture their products
to make the world a cleaner, healthier and more productive place.
Headquartered in Egham, Surrey, United Kingdom, the Company employs
approximately 7,900 people located in more than 30 countries. For
more information, visit www.spectris.com .
[1] On a like-for-like ('LFL') basis. Like-for like sales are at
constant exchange rates and exclude the impact of acquisitions and
disposals during the year
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