Spectris Commits to Malvern Panalytical

Egham, UK 2/19/19— Spectris, which provides productivity-enhancing instrumentation and controls, has announced that it is undertaking a strategic review of its business portfolio in order to focus and simplify the company. “As such, work is ongoing to identify a group of operating companies which can deliver greater shareholder value creation, with sales growth, margin expansion and working capital efficiency as the key goals, underpinning growth in operating cash flow,” stated the company in its year-end earnings press release. Spectris announced that three of its current businesses, Malvern Panalytical, HBK and Omega, which together represent 60% of revenues and adjusted operating profits, will remain intact.

Analytical instrument firm Malvern Panalytical provides atomic spectroscopy and materials characterization solutions. HBK (formerly Brüel & Kjær Sound & Vibration and HBM) sells test and measurement and weighing technology, with measurement solutions designed for industrial and lab settings. Omega is a distributor of products, or products for process measurement and control of temperature, humidity, pressure, strain, force, flow, level, pH and conductivity, including products for lab testing. Options for the other businesses include scale reduction, realignment or divestment. Spectris has highlighted its efforts to improve operating margins, which declined three-tenths of a percentage point organically in 2018 to 15.5%, and implementation of cost reduction plans.

On the company’s earnings conference call, CEO Andrew Heath stated, “We serve a diverse and wide set of end-markets. And whilst that diversity offers us some protection from weakness in any particular industry, it has also brought complexity and a lack of clarity. In essence, we’re looking to simplify and focus the group around a number of scaled platforms. Those platforms will be durable through the cycle and will deliver increased shareholder value.” He noted Malvern Panalytical, HBK and Omega have desirable business characteristics in that they serve high-growth markets, have good gross margins, are asset light, produce strong free cash flows and hold strong potential going forward. Consequently, these three companies will also be the target of future investments and acquisitions.

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