Spectris says strong pound to weigh on 2014 revenue

Fri Jan 17, 2014 7:27am EST

Related Topics

* Expects 2014 revenue to be hit by 50-60 mln stg

* Expects 2013 adjusted operating profit to fall 1 pct

* 2013 sales up 2 pct

* Shares fall as much as 2.4 pct

By Aashika Jain

Jan 17 (Reuters) - Electrical engineering company Spectris Plc said it expected a strong pound to reduce 2014 revenue by 50 million-60 million pounds.

Spectris, which gets most of its revenue from outside the UK, has been battling the effects of a stronger pound and lacklustre demand for its equipment from miners across the world.

Spectris shares, which supplies testing and control equipment for the mining, pharmaceuticals and automotive industries, fell as much as 2.4 percent on the London Stock Exchange on Friday morning.

"If we use today's rates... we have a topline forex headwind of 50-60 million pounds and the operating profit headwind would be 6-8 million pounds," Finance Director Clive Watson said in a post-earnings call with analysts.

Spectris said it expected adjusted operating profit of 214.7 million pounds on a 2 percent rise in revenue for the year ended Dec. 31, 2013, helped by acquisitions and currency movements.

That would imply revenue of 1.25 billion pounds ($2.04 billion).

"Sterling strength is impacting FY14 forecasts and, as a result, we expect about 3 percent consensus downgrades, driven mainly to forex," Jefferies & Co analyst Andy Douglas said in a note to clients.

The pound (=GBP) has gained about 6 percent against the dollar in the last six months.

"Issues around mining and metals that we have talked about through the year are still evident in Q4," Chief Executive John O'Higgins said on the call.

The global mining industry has been under pressure to reduce overheads as demand for raw materials levels off after a decade of strong growth. Sector heavyweights have slashed capital spending by billions of dollars.

Egham, Surrey-based Spectris's shares were down 1.3 percent at 2,449 pence at 1219 GMT on the London Stock Exchange.

The stock has underperformed the FTSE All Share Electronic Equipment Index in the last 12 months by 5.2 percent. The index constitutes of sector stocks such as Laird Plc, Dialight Plc and XP Power Ltd.

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