Yahoo Finance Spectris moves towards product testing services as profits rebound
Precision instrument manufacturer Spectris is to move away from supplying products to its customers to a model more focused on services as demand for testing increases.
The decision has been driven by a drop in the number of technical staff employed by companies in-house in the US and Europe, the company said, increasing the need to outsource testing and automation projects.
Last month Spectris bought Cambridge-based Concept Life Sciences Group, which offers drug discovery and development services across a number of sectors including food and agriculture, for £163m, boosting the range of services it can offer.
The FTSE 250 company bought automotive testing firm Millbrook in 2016, and chief executive John O’Higgins has indicated his desire to make further acquisitions in the field.
Pre-tax profits for 2017 jumped to £278.4m. This follows a difficult 2016, when Spectris took a £115.3m writedown, sending pre-tax profits down to just £31.9m. Sales last year rose 13pc to £1.53bn.
Mr O'Higgins said the company’s performance had been boosted by a recovery in North American markets, which had declined in 2016, and good sales in Asia.
“Our balance sheet remains strong and we will continue to make acquisitions to support this strategy as we expand our software and services capability,” he said.
The company announced a share buyback totalling £100m, which would start "as soon as possible", as it returns the proceeds received from the sale of machine vision technology division Microsan to shareholders.
However Spectris revealed a cost-saving initiative launched last year called Project Uplift is now expected to make fewer savings than previously thought.
The company said that the first phase of the project had been delayed thanks to an IT upgrade that had proved more complex than initially thought, meaning the projected savings next year would be £25m, rather than the £35m originally predicted.
Shares in the firm were up 3.97pc on Monday to £27.52pc.
