RNS Number : 6852N
22 May 2020
22 May 2020 - Spectris plc (SXS: LSE), the expert in providing
insight through precision measurement, provides a trading update
for the four-month period to 30 April 2020 ('the period') and an
update on the actions it is taking in relation to COVID-19.
Andrew Heath, Chief Executive, said :
"I would like to recognise and thank our people for their
commitment and selflessness, as we all pull together during this
challenging time and embrace the strength of our culture. As well
as looking out for each other, finding ways to support our
customers and keeping our facilities operational, I am really proud
of the whole Spectris team, who have gone above and beyond, making
personal sacrifices, as we work to retain capability and protect as
many jobs as possible. We are all committed to minimising the
impact caused by this global pandemic, to our customers, suppliers,
communities, shareholders and one another.
"As expected, the global macro-economic environment has remained
challenging, impacting the majority of our customers. While sales
in China recovered strongly in April, activity in Europe and North
America slowed sharply, resulting in a 12% like-for-like sales
decline for the Group in the first four months of the year.
"We entered this crisis with net cash on the balance sheet and
good liquidity. Since then, we have continued to generate cash and
take further cost actions. We are taking a balanced approach,
implementing mitigation actions while acting in accordance with our
values, as the way to deliver our long-term financial health and
sustainability; thereby ensuring we emerge from this crisis a
stronger and even more resilient business."
Update on trading
Group like-for-like 1 ('LFL') sales declined by 12% in the
period. Disposals reduced sales by 9%, partly offset by a 1%
favourable foreign currency exchange movement, resulting in a 20%
decrease in reported sales. After a 9% decline in the first quarter
(preliminarily disclosed as 10%), April's performance has been in
line with our revised expectations, with LFL sales down 21%, most
notably in North America and in the academic research and
automotive end markets.
Sales by geography and business
4 months Jan-Apr 4 months Jan-Apr
------------------ ---------------- -------------------- ----------------
North America (6%) Malvern Panalytical (23%)
Europe (13%) HBK (5%)
Asia (20%) Omega (10%)
Rest of the World (3%) Industrial Solutions (10%)
Total (12%) Total (12%)
------------------ ---------------- -------------------- ----------------
LFL sales decreased notably in the period in Asia, driven by
China, although China rebounded strongly in April as pent up demand
translated to revenue. In Europe and North America, LFL sales for
four-month period were 13% and 6% lower, respectively,
reflecting the later phasing of the start of the lockdowns in those
From an end market perspective, LFL sales in the period were
down more sharply in metals, minerals and mining where investments
are being put on hold as demand for metals-based products declines,
and academic research, as universities and research institutes
closed their doors. Machine manufacturing was the only end market
to see growth in the period, with good onward demand from process,
food and medical markets.
Malvern Panalytical posted a 23% decline in LFL sales, against a
tough comparator and reflecting its high exposure to Asia.
Additionally, many customers have not been able to complete the
installation of products impacting the ability to recognise revenue
for those goods. There is a further impact related to order delays
in certain jurisdictions.
1 Like-for like sales are at constant exchange rates and exclude
the impact of acquisitions and disposals during the year
Trading in HBK held up well, posting only a 5% LFL sales
decline, supported by strong growth in North America and good
growth in machine manufacturing in the period. Given its later
cycle exposure and higher presence in Europe and North America, we
expect the performance in the remainder of the second quarter to be
At Omega, LFL sales were 10% lower primarily reflecting a sharp
decline in demand in its main market, North America, with a number
of customers temporarily closing their operations. Industrial
Solutions also posted a 10% LFL sales decline, with those
businesses exposed to automotive and upstream oil and gas most
Maintaining a strong balance sheet and conserving cash is a key
priority for the Group during this period of uncertainty. The Group
continues to be highly cash generative, with a cash conversion of
over 150% for the period. At the end of April, we had net cash of
GBP59.9 million (GBP33.5 million at 31 December 2019), with a cash
balance of GBP244.2 million and gross borrowings of GBP184.3
million. The Group has GBP827.5 million of committed banking
facilities and has access to a number of uncommitted and bank
Due to the market uncertainty, we withdrew our forward financial
guidance for 2020 on 6 April. Visibility continues to remain low
and we therefore maintain this position. Given the highly
cash-generative nature of the Group, we remain in a good position
to weather the various market scenarios we have modelled.
A balanced approach to managing the business
With trading impacted, the outlook uncertain and our employees
and customers facing a challenging environment, it is more
important than ever that we take a balanced, socially responsible
approach to managing our business, in line with our culture and
Whilst we will continue to ensure we deliver as strong a
financial performance as possible in these unprecedented times, we
are ensuring we address the primary needs of all of our
stakeholders - protecting and supporting our people; working more
closely and flexibly with customers and suppliers; whilst also
considering how we can support the communities in which we operate,
to deliver long-term sustainable value to our shareholders. By
taking these steps to build stronger stakeholder relationships, we
will be better positioned to respond to the new business
environment that emerges post COVID-19 and help further drive the
long-term profitable growth of Spectris.
Our business continuity plans have been enacted to protect the
core strengths of the business, as well as prepare for the
recovery. Additionally, our aim is to retain capabilities and
protect jobs as long as possible, prioritising short-term temporary
costs savings over structural long-term cost improvement, in
support of our financial performance. Compared to the same
four-month period last year, our LFL overheads are 9% lower. There
is an even greater focus on liquidity and capital management, as
well as continuing to deliver good operating cash generation during
Safeguarding our people
Our priority continues to be the health, safety and well-being
of our people. As a Group, we worked quickly to enable working from
home arrangements for all roles that can do so. To protect those
essential employees still deployed at our sites, we have
implemented revised working practices and heightened safety
standards including social distancing and split shifts within our
facilities, PPE provision and enhanced cleaning and disinfection
processes. In addition, we have enhanced our mental health support
and focused on staying connected with our people who are working
away from the offices .
As of today, all our manufacturing sites continue to operate at
or near full capacity. Disruption to our business activities and to
our supply chains has been limited and manageable to date. Home
working has also proved to be effective, with employees
successfully supporting our operations and customers remotely.
Supporting our customers and suppliers
We are focused on continuing to support our customers by
providing them with the products, services and any assistance they
need. Our sales and service employees have been innovative in
reaching out to and supporting customers, many of whom are working
remotely themselves or have tight restrictions in place on
accessing their facilities.
To provide support remotely, as well as enhance our customer
interaction, we have increased our use of digital engagement,
including virtual training and webinars, online demos and product
introductions and expanded online marketing campaigns and
programmes. We have also accelerated self-installation and remote
support tools to keep our customers operational.
We are also working more closely with our suppliers and have
pledged to support any small supplier that is suffering hardship as
a result of the impact of COVID-19 who requests early payment
Protecting the business and preparing for the recovery
Given the high level of uncertainty and the low level of
visibility regarding trading, we had already taken several actions
to mitigate the economic impact on the Group including a headcount
freeze; halting inflation-related salary increases; a 25% reduction
in Executive salaries and Board fees; and a reduction in
discretionary spending and capex.
Since then, to further manage our costs, whilst protecting jobs
and mitigating the need for redundancies, we have asked our people
to take a temporary reduction in pay, work a shorter week or be
furloughed. We have drawn on government wage replacement schemes in
certain jurisdictions, where appropriate to do so.
We appreciate that this places a burden on our people and have
therefore asked the leadership to shoulder the biggest impact. We
very much appreciate the cooperation and support that has been
given. We are making every effort to best retain our people's
experience and capabilities, to ensure that we emerge in a position
of strength from this crisis.
Delivering shareholder value
We believe the best way to drive long-term sustainable value
creation for our shareholders is through prioritising our
employees, customers, suppliers and communities at this time.
Commensurate with this objective, we are taking action to maintain
our robust balance sheet and liquidity position, protect R&D
and capex investment wherever possible to support long-term growth
and committing to the continuous review of our ability to reinstate
the dividend as soon as the time is right.
Executive Committee changes
Paolo Carmassi, President of Malvern Panalytical, is leaving the
company to take up a new external role. We would like to thank
Paolo for his hard work and commitment during the past three and
half years, not least in leading the successful integration of the
Malvern Instruments and Panalytical businesses.
Mark Fleiner, Business Group Director of the Industrial
Solutions Division, has been appointed to succeed Paolo as
President of Malvern Panalytical, effective 1 May, while we seek a
replacement for his prior role.
Rebecca Dunn has been appointed to the new role of Head of
Sustainability (ES&G) reporting directly to Andrew Heath.
Rebecca has been Deputy Company Secretary at Spectris for the past
three years and prior to that held senior roles at BG Group plc and
RSA Insurance. This new appointment underlines our commitment to
environmental, social and governance matters, recognising their
even heightened importance at the current time.
Judith Wettach will join Spectris in June as Group Head of
Corporate Development. She was previously Global Head of M&A
and Strategy at Coats Group plc and prior to that, led strategy and
business development for Rio Tinto Alcan, having been a strategy
consultant at McKinsey. Judith brings extensive experience in
M&A, strategy development and execution, change leadership and
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) 333 300 0804, toll free
0800 358 9473 - Pin code: 52335823#.
Or for replay, please dial +44 (0) 333 300 0819, toll free 0800
358 2049 - Pin code: 301323329#.
Spectris will publish its half-year results for the six months
ending 30 June 2020 on 4 August 2020.
Head of Corporate Affairs
+44 1784 485325/+44 7920 230093
Richard Mountain/Susanne Yule
+44 203 727 1340
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 9,000 people located in more than 30 countries. For
more information, visit www.spectris.com .
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(END) Dow Jones Newswires
May 22, 2020 02:00 ET (06:00 GMT)
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