Spectris Rises to 20-Year High as Profit Beats Analyst Estimates on Bids
Spectris rose as much as 8.5 percent to 1,400 pence, the biggest intraday gain since July 16. Adjusted operating profit, excluding acquisition costs and other one-time items, climbed to about 140 million pounds ($222 million), the company said in a statement today. That exceeded the 130 million-pound average estimate of five analysts in a Bloomberg survey.
The test and measurement business accounted for more than 50 percent of the additional profit late last year, and was “absolutely” driven by increased sales to the automobile industry, Chief Executive Officer John O’Higgins said in a phone interview today. “The recovery in the car industry accelerated in November and December, which led to quite a bit of additional profit delivery.”
Manufacturers use Spectris sensing, data capture and simulation technology in their vehicle testing process, including on test track cars.
Spectris traded 5.3 percent higher at 1,358 pence as of 1:21 p.m. The stock has rallied 72 percent since the company announced results for 2009 on Feb. 23, giving the Egham, England-based company a market value of 1.58 billion pounds.
Operating profit for 2009 was 79.2 million pounds. Like- for-like revenue in 2010 rose about 12 percent.
Toyota, BMW, Ford
The company’s biggest automotive client is Japan’s Toyota Motor Corp., and Spectris also had a “very good year” with U.S.-based Ford Motor Co., O’Higgins said. In 2008 it fitted out Bayerische Motoren Werke AG design facilities in a development center in Munich, and the project is expected to have a four-to- five year timescale, he said.
“We have been working with a few other auto companies and are working to get approval to make some public announcements about some contract wins with our full-year results,” he said. The companies are based in Europe and Asia, O’Higgins said, declining to name them.
Spectris is scheduled to report the results on Feb. 25.
The company has “significant balance sheet headroom” of about 200 million to 250 million pounds, David Phillips, a London-based Citigroup Inc. analyst with a “buy” recommendation on the stock, wrote in a report today. “We see scope for further value enhancement via bolt-on M&A.”
The company today said it acquired Delta F Corp., a U.S. supplier of specialist gas analyzers, for $25 million in November. O’Higgins said he expects “quite a number of acquisition-related projects this year.”
In 2009, Spectris was the subject of speculation that Siemens AG, Europe’s largest engineering company, may make a takeover offer for the company. O’Higgins declined to comment when asked if any approaches had been made, adding that any “serious” offers would have to be disclosed.
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