* Pound strength could impact H2 operating profit by 8 mln
stg - CEO
* H1 pretax profit falls 10 pct
* Shares fall as much as 6.6 pct
(Adds CEO comments, analysts' comments, share movement)
By Aashika Jain
July 25 Electrical equipment maker Spectris
Plc's sales could take "a hit" of up to 40 million
pounds ($68 million) in the second half if exchange rates for
the pound against major currencies stay near current levels, CEO
John O'Higgins said.
The impact on operating profit would likely be about 8
million pounds, O'Higgins said in an interview on Friday.
Spectris, which gets most of its revenue from outside the
UK, took a currency hit of about 36 million pounds on sales and
4 million pounds at the operating level in the first half, he
The company's shares fell as much as 6.6 percent in morning
trading, making the stock the top loser on the London Stock
Exchange's FTSE midcap index.
Spectris specialises in testing and control equipment,
supplying the mining, oil and gas, pharmaceutical and
The company reported a 10 percent slump in first-half pretax
profit, hurt by lower demand in the mining and academic research
sectors, the main markets for its materials analysis unit, as
well as by the pound's strength.
Pretax profit fell to 67.3 million pounds, from 75 million
pounds a year earlier, while sales dropped to 539.8 million
pounds from 566.2 million pounds last year.
O'Higgins noted that the pound was 8 percent stronger on
average in the latest half compared with the same period of
The materials analysis unit makes devices that determine the
structure, composition and quality of particles during research
and production processes.
The weakness in the business continued in the second quarter
and could not be offset by the performance of the company's
three other units, as happened in the first quarter, he said.
The company's other divisions are test and measurement,
in-line instrumentation and industrial controls.
Investec analysts described the results in the materials
analysis business as "horrible."
"...The company says it expects H2 expectations to be met,
but we initially expect to reduce our estimates by 10 percent
for FY14E, and perhaps a bit more," Investec analysts Michael
Blogg and Chris Dyett said in client note.
Numis analysts, highlighting the weakness in the materials
analysis division, cut their rating on the stock to "hold" from
Spectris said it expected its recent acquisitions to
contribute at least 4 percentage points of sales growth in the
materials analysis unit in the second half.
The company has made three acquisitions this year to
strengthen its exposure to life sciences.
Shares in Egham, Surrey-based Spectris were down 6.6 percent
at 1,956 pence at 1028 GMT.
(Reporting by Aashika Jain in Bangalore; Editing by Gopakumar
Warrier and Ted Kerr)