Spectris (SXS) H1 2024 earnings summary

Executive summary

• H1 2024 performance was impacted by softer end markets, ERP system rephasing, and macroeconomic uncertainty, with £22m of sales and £15m of profit shifted to H2; full-year impact expected to be neutral.

• Portfolio rationalization completed with the sale of Red Lion Controls and announced acquisitions of SciAps and Micromeritics to strengthen advanced materials analysis and the Scientific division.

• Order book at £532m provides good visibility for H2, with adjusted operating profit for FY expected in line with market expectations.

• Record new product launches and continued R&D investment underpin future organic growth and market share gains.

• £150m share buyback ongoing, with £100m remaining to be completed in the next 12 months; interim dividend increased by 5% to 26.6p per share.

Financial highlights

• H1 2024 revenue was £589.7m, down 16% year-over-year (like-for-like -10%), with adjusted operating profit down 35% to £61.1m and margin at 10.4%.

• Statutory operating profit was £24.0m, with profit before tax at £235.3m, including £210.6m profit on Red Lion disposal.

• Adjusted EPS fell 38% to 47.9p; statutory EPS rose to 179.6p due to disposal gains; DPS up 5% to 26.6p.

• Net cash at end-June was £292.5m, with cash conversion at 111%.

• Return on gross capital employed stable at 16.8%.

Outlook and guidance

• Adjusted operating profit for FY 2024 expected in line with consensus, excluding incremental profit from new acquisitions.

• Working capital expected to remain within 11%-15% of sales; H2 capex ~£25m; SaaS costs ~£30m; net debt expected at ~1.5x EBITDA; interest costs 5%-6%; tax rate ~23%.

• Remaining £100m share buyback to be completed over next 12 months.

• Medium-term outlook remains positive, supported by structural growth trends in clean tech, digitalization, automation, and new medicines.