The share price needle for instrumentation and controls company Spectris (LON:SXS) moved lower in early deals after a mixed half-year update.
Adjusted operating profit of £66.5mln in the first half of 2017 was down 4% from £68.9mln the year before, and some 3% below consensus forecasts, albeit after one-off costs of £8.8mln relating to its Project Uplift restructuring programme.
Adjusted profit before tax also eased 4%, to £66.5mln from £68.9mln the year before.
Sales rose 22% to £710.0mln from £581.4mln the year before, helped by favourable exchange rate movements; striping out the foreign exchange effects, the rise was 10%, while excluding sales from recently acquired companies produces a like-for-like (LFL) rise of 5%.
“This rather pleasing performance on revenues is somewhat tempered by the adjusted operating margin of 10.6% (before previously flagged Project Uplift costs) - a 3% LFL decrease,” the broker Shore Capital noted.
"We are pleased to have delivered 5% organic sales growth in the first half of the year, albeit against a weak prior year comparator,” declared John O’Higgins, chief executive of Spectris.
“We continue to focus on customer solutions, in particular the growth opportunities from the Malvern PANalytical merger and within the automotive sector, and building on the acquisitions and capital investments we have made over the past 12 months in services and software,” he added.
The company’s expectations for the full year remain unchanged.
The interim dividend was lifted 6% to 19p and is covered 2.2 times by adjusted basic earnings per share.
The shares were down 6% at 2,475p in mid-morning trade, but are up 6.9% year-to-date.
“An in-line outcome suggests little change,” said the team at UBS, trying to guess how the market would react to the announcement.
“However, on balance a lack of leverage on higher organic sales growth is disappointing in our view and highlights a continue underlying cost growth headwind. Project Uplift is designed to compensate for this, but our Sell rating reflects a view that it will remain a challenge to counter cost growth in a lower growth backdrop,” UBS said.