Spectris posted a jump in group like-for-like sales for the first quarter on Friday and said its performance remains consistent with its expectations for the full year, as it announced that chief executive John O'Higgins plans to retire in the course of the next twelve months.
In the four months to 30 April, group LFL sales were up 6%, while growth from acquisitions, net of disposals, contributed a further 1%. However, currency movements reduced sales by 5%, leading to a 2% increase in reported sales for the period.
LFL sales rose in North America, Europe and Asia, with particularly strong growth in China and in the UK, led by strong demand for Millbrook's test services. Spectris said all segments delivered LFL sales growth in the period, driven by sales to the pharmaceutical and automotive industries, although in-line instrumentation saw sales drop against a strong comparator the previous year.
Net debt at the end of April was £217 million, up £167m in the period due mostly to the acquisition of Concept Life Sciences in January, the company's capital expenditure programme and ongoing spend on the £100m share buyback programme.
O'Higgins, who will stay on as CEO until a replacement is in place, said: "Performance in the year to date shows a continuation of the strength in our end markets experienced in 2017, partly offset by adverse foreign currency exchange impact. Performance remains consistent with our expectations for the full year, although noting that visibility on our order book remains limited.
"We are pleased with the strategic developments we continue to make which further expand our services capabilities and foster increased collaboration between our operating companies as we continue to focus on the provision of complete solutions for our customers."
Spectris said a formal process to recruit O'Higgins' successor, considering both internal and external candidates, will begin shortly.
Shore Capital analyst Ben McSkelly said: "We believe the underlying growth figure places some pressure on our H1 forecasts, although management are cautious on visibility into H2. We have previously discussed how the intensive capital allocation to the Millbrook acquisition should reap rewards on a two-year timescale and delivery was vital. Hence it is encouraging to see Millbrook leading the growth in the group in the statement, we look for more details at the interims (as well as the fit with recent similar US acquisition Revolution Engineering).
"Overall this is a strong update, and we retain our buy recommendation."