Spectris stock rises despite sluggish start to the year

Investing.com -- Shares of Spectris (LSE:LON:SXS) edged up 0.7% following a trading update that revealed a slow start to the current fiscal year with an 8% decline in organic constant currency (OCC) sales year-on-year (YoY) for the first quarter.

Despite this initial setback, the company’s management has maintained its full-year earnings before interest, taxes, and amortization (EBITA) guidance, citing a strong order book and a successful profit improvement program.

Spectris, a leading instrumentation and controls company, reported first-quarter sales of £299 million, which represented an 8% drop on an OCC basis compared to the same period last year.

The decline was partly due to the disposal of Red Lion Control; excluding this, constant currency sales were up by 5%. Nevertheless, the OCC figure, which showed a contraction, is likely to be the focal point for market observers.

The company’s order book stood at £529 million at the end of March 2025, marking a 4% increase on a constant currency basis from December 2024.

The book-to-bill ratio for the first quarter was 1.07x, suggesting a healthy demand for Spectris’ products. Moreover, net debt was reduced to £502 million from £549 million at the end of the previous fiscal year, reflecting strong cash generation and a weaker US dollar.

Divisionally, Spectris Scientific saw an 11% YoY decline in OCC sales, while Spectris Dynamics reported a 3% decrease, with noted weaknesses in the automotive, semiconductor, and materials sectors.

Geographically, all regions experienced a YoY decline, with Asia down 7%, Europe 6%, North America 10%, and the rest of the world (RoW) 15%.

Despite the challenging start to the year, management remains optimistic about mitigating the direct impact of tariffs and is prepared to address any indirect macroeconomic effects.

The company expects to deliver "strong levels" of EBITA growth in line with market expectations for the fiscal year 2025.

The Profit Improvement Programme (PIP) is also progressing well, with £30 million in savings anticipated for the current fiscal year and a run-rate of £50 million expected in the following fiscal year.

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