Spectris Falls Most in 24 Years on Equipment Slump: London MoverPeter Woodifield
Spectris Plc plunged the most since at least 1989 after the U.K. maker of production-testing gear said a sluggish world economy prompted clients to defer orders.
“While we anticipated a deceleration in the first quarter, the slowdown was broader and deeper than expected,” Michael Blogg, an analyst at Investec Securities, said in a note to clients.
The shares slumped 14 percent to 1,908 pence in London, the lowest price since Nov. 28, wiping about 373 million pounds ($569 million) off the company’s market value. The volume of shares traded was more than six times the three-month daily average. The stock has fallen 23 percent since reaching a record on March 15.
The world economy is expected to expand 3.3 percent this year, the International Monetary Fund said three days ago. That’s slightly faster than the 3.2 percent recorded last year but slower than 2010 or 2011, according to IMF data. Spectris makes testing and measuring gear for industries from aerospace to consumer electronics. Its customers include General Motors Co. and Hyundai Motor Co.
First-quarter organic revenue fell 9 percent on a constant currency basis, the Egham, England-based company said in a statement today. There is no reason to expect the delayed orders will be canceled, Spectris said. The drop compares with 5 percent growth in the same period a year ago.
Full-year revenue is still likely to be ahead of last year, based on the company’s “opportunity pipeline,” Spectris said. It’s taken action to reduce costs by 10 million pounds this year so that profit will “broadly in line” with its forecast at the start of the year, the company said.
“Despite this, the shares will be under pressure as we now clearly have a lack of earnings momentum,” Scott Cagehin, an analyst at Numis Securities with an add recommendation on the stock, said in a note to clients. There will be “clear downward pressure” on earnings estimates if the first-quarter growth rates continue, he said.
“The broad-based slowdown has significant read-across for other companies,” said Blogg, who put his hold rating and 12-month price target for Spectris under review.