“Over the longer term we are well positioned,
both in terms of geographic exposure and
end user markets”
Spectris delivered a strong performance in 2007, with sales, profits, operating margins and cash flow from continuing businesses all improving compared with the prior year. At constant currencies, sales increased by 6.5%, including 1% from acquisitions, and operating profit increased by 35%.
The major geographic regions again showed growth during 2007. The strongest growth was seen in Asia, where sales increased by 7% at constant currencies, led by China. Sales in Europe increased by over 3% at constant currencies. Sales in North America increased by 6%, helped by the acquisition of the IPI business acquired in 2006. Sales in the rest of the world increased by 32%, reflecting the growing importance of industrialising markets such as Russia, South America and Africa.
Operating margins improved to 15.8% (2006: 12.9%), as the restructuring and other business improvement actions taken in prior years continued to deliver results.
Our objective is to deliver shareholder value over the long term by supplying productivity-enhancing solutions for our customers. Our strategy is based on five elements: strengthening market positions through innovation; increasing regional expansion with the focus on emerging markets; growing existing businesses through acquisition; focusing on operational excellence; building our presence in key strategic growth areas.
In order to give better clarity to our operations, we have re-aligned the activities of our business segments to reflect more closely the applications and end user industries we serve. Going forward, our businesses will be reported in four segments. These are: Materials Analysis, Test and Measurement, In-line Instrumentation and Industrial Controls. Figures for prior years have been restated accordingly. Figures at group level and key performance indicators are not affected by these changes. For comparative purposes, the key results for the group based upon the prior segmentation are shown in Note 3. The segments are described in detail in the Business review.
Two acquisitions were made during the second half of the year. On 2 July, Particle Measuring Systems acquired the distribution activities of Quest Technologies in Singapore, giving it an increased presence in Asia. On 1 November, Servomex acquired Contrôle Analytique, a leading provider of specialist gas analysis products based in Canada. The acquisition enables Servomex to increase its product offering in the global industrial gas market and also provides opportunities for the company to meet the needs of customers in the semiconductor market.
Research and development expenditure increased to £45.2 million, which represents 7% of group sales, enabling the businesses to maintain their leading market positions and continue to meet the productivity challenges their customers face.
Over the longer term we are well positioned, both in terms of geographic exposure and end user markets. We have a clearly defined strategy which will deliver both top-line and bottom-line performance.