UPDATE 2-Spectris sees revenue growth below forecast, shares tumble

Fri Apr 19, 2013 10:55am EDT

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(Adds CEO and analysts' comments; updates share movement)

By Abhirup Roy

April 19 (Reuters) - British electrical engineering company Spectris Plc said it expects revenue growth in 2013 to be below its previous forecast following a slow start to the year, pushing its shares down as much as 16 percent on Friday.

First-quarter sales fell 8 percent as weak customer confidence across all its major markets led to a deferral of orders and shipment delays, the company said.

"We are seeing the year as a whole at a lower growth rate than we expected at the beginning of the year. Our expectation internally was lets say 4 to 5 percent, that's come down to 1 to 2 percent. So that's a halving of demand," Chief Executive John O'Higgins told Reuters.

Spectris' stock was trading down 15 percent at 1900 pence at 1449 GMT, making it one of the top percentage losers on the London Stock Exchange. The stock had risen about 6 percent this year to Thursday's close.

The CEO said he was surprised at how weak sales in Asia were given the company's strong presence in the region. On a like-for-like basis, Asia Pacific sales fell 15 percent.

Spectris, which makes testing and control equipment for industries like mining, oil and gas, pharmaceuticals and transportation, had reported a rise in profit in 2012, helped by contributions from a string of acquisitions in 2011 and strong demand from Asia.

U.S. defence spending cuts and university budgets, which are heavily government driven, also hurt sales more than anticipated, O'Higgins said.

Comparable sales in North America dropped 10 percent while Europe declined 6 percent.

The company, however, said its opportunity pipeline remained strong and that there was no reason to believe that deferred orders would be cancelled.

"Experience would suggest that the risks are that this kind of thing probably will persist a bit longer than maybe (the company) would like," Arden Partners analyst Chris Thomas said, adding that it was unlikely the company would see a bounce back quickly.

Spectris said on Friday that it had reduced its net debt by 116 million pounds (about $177 million) in the quarter using proceeds from the sale of its Fusion UV business late last year.

It also said it has taken steps to cut about 10 million pounds in costs in 2013.

"Spectris must be expecting to recover some of these lost revenues and while possible/probable, it is hard to put these into forecasts given much still hangs on a (second-half) improvement in activity," Investec analysts Michael Blogg said in a research note.

Rivals IMI and Rotork Plc, both of whom warned last year on tougher times ahead, are yet to report first-quarter results.

IMI shares also fell as much as 4 percent on Friday, with traders citing a read-across from Spectris. ($1 = 0.6539 British pounds) (Editing by Roshni Menon)

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