"The difficult market conditions in the second half of 2012 provided a backdrop for Spectris to demonstrate the quality and resilience of its business model," Michael Blogg, an analyst at Investec, commented this morning.
"We have revised our estimates from a basis of ultra-caution to a level achievable in a low-growth environment, with upside potential if markets recover more quickly. The increase in our target price, driven by the 6-7% increase in our earnings per share (EPS) estimates, is not quite enough to justify a more positive recommendation than hold."
He added: "Spectris has the spread and market presence to deliver growth in most circumstances, augmented by its organic and bolt-on investments financed out of cash flows and overseen by a highly-respected management team.
"It is now within striking distance of the FTSE 100, where we believe it would not look out of place in terms of investment quality.
"The board is confident that Spectris continues to be strategically well-positioned for 2013 and beyond."
The group said it expects to see growth in its Life Sciences sector continue, but said its Mining sector looks set to continue to slow in the first half of 2013.
"We also see potential in the emerging nano-materials sector, creating demand from academic research institutions, as well as in-house research and development laboratories in the pharmaceutical and advanced materials sectors," it said.
Sales in Test & Measurement rose 3.0% on a like-for-like basis, while operating profit grew 0.7%, helped by strong demand from the electronics and telecoms markets and continued growth in automotive.
In-line Instrumentation sales climbed 4.0%, and operating profit rose 0.5%, after it experienced good demand from Asia Pacific, Japan and China in particular.
Productivity-enhancing instrumentation company Spectris posted an 11 per cent rise in annual sales for 2012, contributing to the same percentage rise in adjusted earnings per share.
Sales for the 12 months climbed from 1,106.2m to 1,230.8m year-on-year, while adjusted profit before tax increased to 217.3m from 191.6m, resulting in adjusted earnings per share of 137.5p (2011: 124.1p).
Actual pre-tax profit totalled 186.7m, compared to 166m the previous year. The dividend was increased by 16% from 33.6p to 39.0p per share.
John O'Higgins, Chief Executive, said: "This strong result was achieved through the progress we made on all aspects of our strategy. We will continue to invest in new products and applications which enhance our customers' productivity, seek further geographic growth opportunities across the group, and improve the resilience of the business through organic and acquisition activities.
Productivity-enhancing instrumentation company Spectris has completed the sale of its Fusion UV business to Heraeus Holding GmbH for a total cash consideration of 172m dollars, the post-tax proceeds of which will be used to pay down debt.
The sale is expected to be somewhat dilutive to earnings per share in 2013 and the impact on earnings per share is expected to be approximately five pence.
Fusion UV is a provider of industrial ultraviolet curing systems and technology worldwide. The company's core competency is in the area of microwave powered, electrode-less lamp technology to generate intense UV energy that is used for UV curing.
A strong finish to 2012 and an improved outlook for the global manufacturing sector have given Spectris renewed confidence for the New Year, prompting investors to drive up shares in the maker of precision instruments. Nevertheless, and like the sector as a whole, through its supply of equipment designed to enhance productivity in the manufacturing sector, Spectris is reliant upon the wider macroeconomic environment, and – like the sector as a whole – has endured a tough few years. At one point it was even forced to cut 10% of its workforce and ask remaining staff to forgo bonuses and take unpaid leave. Since then, the group has recovered its footing, and last year broadened its exposure to the recovering US market with the $475m acquisition of Omega Engineering. The result is that the British group’s revenues are now roughly equally split between North America, Europe and Asia, the Financial Times’ Weekend edition wrote.
Datafeed and UK data supplied by NETbuilder and Interactive Data.
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