UK-listed telecoms and connectivity testing equipment manufacturer Spirent Communications (SPT) is facing a one-off $4m hit as the company gears up for expansion.

With 5G next generation mobile networks around the corner and new, faster ethernet broadband technology in the pipeline, Spirent has been on a hiring binge to meet client demand, adding a slew of new managers and building out its sales and marketing teams.

This appears to be a sensible investment for the future with Spirent today confirming that it had continued to see ‘healthy’ order intake growth, in line with that seen in the first half.

Investors appear to agree, marking the share price modestly higher (1p) to 202p, valuing the business at £1.24bn. That’s close to the highest level for the shares since the dot.com sell-off in 2001.

In a third-quarter trading update, the company also said that it expected its revenue and earnings performance to again be weighted to the second half of the year, but added that ‘our expectations for the full year remain unchanged,’ said chief executive Eric Updyke.

FACING THE FUTURE

Since joining as boss in May Updyke has steered Spirent on a course towards greater recurring revenue streams. The hope is that this will help smooth out what has historically been unpredictable, project-based revenue.

Spirent Communications said it had also developed its sales and marketing structure ‘to drive improved effectiveness to exploit our leading technologies’.

‘The one-off exceptional cost of these planned changes is circa $4m with the large majority of this cost expected to be incurred in this financial year’, said today’s statement.

In connected devices, the company said it remained on track to meet the planned demand for 5G device testing, with increasing interest from its customer base and a new solution set for delivery in 2020.

‘We saw the benefit of the diversity of our portfolio as increased demand for our Positioning products offset some short-term lumpiness in order placement in other areas.’

Find out how to deal online from £1.50 in a SIPP, ISA or Dealing account.

Issue Date: 08 Nov 2019