Spectris has a portfolio of businesses with high-quality technologies, strong market positions and talented people. Technology-led differentiation of instrumentation hardware continues to progress, particularly within offline applications. There remains significant room for differentiation on various hardware dimensions, to provide greater precision and reliability of high-quality data. Equally, opportunities exist for many of our operating companies to expand across the technology stack, including software and application intelligence, to provide greater value-adding solutions for customers. Consequently, the provision of technology-enabled solutions, based on our high-quality instruments, deep application capability, domain expertise and associated software and service offerings, remains at the core of our strategy.
The fundamentals of Spectris’ core addressable markets are attractive, with many displaying GDP+ growth characteristics. We are focusing on certain key end markets and these are witnessing significant trends that we believe are favourable for Spectris’ businesses:
- Electronics and semiconductor
- Metals, minerals and mining
- Technology-led industrial markets.
The strategic review assessed each of the Spectris operating companies to determine their value creation potential and the following key attributes were determined as those that are required to be a platform business:
- Scalable characteristics
- Positioned in attractive end markets
- High gross margins and asset light
- Strongest capabilities and attractive growth and profit potential.
Malvern Panalytical, HBK and Omega were identified as the platforms for growth:
- Malvern Panalytical is a leader in the advanced measurement and characterisation of materials. It provides best in class sensor technologies, insightful data science and extensive domain knowledge and through this, creates superior solutions that enable its customers to accelerate innovation and be more efficient in research, development and manufacturing. It has opportunities to drive growth through market share gain, expanding its capabilities into more predictive and prescriptive solutions and adjacent M&A. Read more
- HBK provides a strongly differentiated and integrated physical sensing, testing, modelling and simulation solution which helps
customers accelerate product development. The end markets in which HBK operates again provide organic headroom expansion as well as adjacent M&A opportunities. Read more
- Omega is a market-leading, specialist, sensor provider to process engineers providing a curated and differentiated product offering. It offers strong application expertise and a leading e-commerce experience. The launch of its new digital platform enables Omega to drive growth and gain market share in the fragmented North American market, with further potential from expanding its product offering into near adjacencies in specialty distribution. Read more
- Industrial Solutions division - the remainder of the portfolio has been grouped together as the Industrial Solutions division and comprises a portfolio of high-value, niche businesses that compete globally. These are now operating under a new leadership team with a focus on operational and financial performance. The portfolio comprises companies with platform potential, which have strong market positions, good growth prospects and margins but require additional scale and, where appropriate, will receive targeted investments to deliver their potential; and other companies which will be managed for value to optimise their performance and potentially divested. Read more
The strategic review also focused on capital allocation and returns. Going forward, the Group will adopt an even more rigorous capital allocation approach and has established a new investment framework to ensure that future investment results in stronger profit growth and value creation. A part of this, the Group is now utilising return on gross capital employed as a key metric.