Renold PLC Trading Update and Impact of Coronavirus (4268E)
February 28 2020 - 2:00AM
UK Regulatory
TIDMRNO
RNS Number : 4268E
Renold PLC
28 February 2020
Renold plc
("Renold", "the Company" or "the Group")
Impact of the Coronavirus
28 February 2020
Renold, a leading international supplier of industrial chains
and related power transmission products, is today providing a
trading update reflecting the Board's current assessment of the
impact of the Coronavirus outbreak on the Group's performance in
the year ending 31 March 2020.
As set out in Renold's interim results, announced on 13 November
2019, the Group experienced challenging market conditions in the
first half of the year. As anticipated, these challenging
conditions have continued into the second half of the year, with
the greatest weakness evident in the US and European markets.
Despite the negative effect of this subdued demand on revenues, the
Group has continued to be effective in mitigating the impact of
this through improved operational efficiency and utilising
flexibility within cost structures. As a result, the Group had been
on track to deliver an adjusted operating profit for the year in
line with current market expectations.
Notwithstanding this robust performance, the outbreak of the
Coronavirus is having a direct impact on certain of the Group's
operations. Most notably, this resulted in an extension of the
Spring Festival shutdown of our Chinese factory by almost a month.
Whilst we are pleased to report that the Chinese factory has
reopened, staffing levels are not yet fully recovered due to
continuing limitations on the movement of employees. In addition,
the extensive disruption and the limited visibility of third party
supply chains into both the Chinese factory and our Australasian
Chain business, means that there remains uncertainty as to the
performance of these business units over the coming months.
We are working closely with customers and suppliers to mitigate
the impact of these factors but now expect there will be a profit
drag across February and March that will not be recoverable before
the end of the year. As a result and whilst mindful of the ongoing
uncertainty, the Board estimates, based on current information,
that the effects described above are likely to reduce adjusted
operating profit by approximately GBP1m in the year to 31 March
2020.
Robert Purcell, Chief Executive, said:
"While the current year has been a challenging one, with
difficult underlying markets, the improvements being delivered
within the business are supporting our profitability.
"However, the impact of Coronavirus, with the extended shutdown
of one of our major factories and continuing uncertainty over
Chinese supply chains, has happened close to the end of our
financial year and there is no opportunity to recover the operating
profit shortfall before March 31st.
"Whilst market conditions remain challenging in the near term
and a level of uncertainty remains over the longer-term
implications of Coronavirus on our business, we are encouraged by
the positive impact of our ongoing strategic initiatives."
Certain information contained in this announcement would have
constituted inside information (as defined by Article 7 of
Regulation (EU) No 596/2014) ("MAR") prior to its release as part
of this announcement and is disclosed in accordance with the
Company's obligations under Article 17 of those Regulations.
ENQUIRIES:
Renold plc 0161 498 4500
Robert Purcell, Chief Executive
Ian Scapens, Group Finance Director
Peel Hunt LLP 020 7418 8900
Mike Bell
Ed Allsopp
Instinctif Partners 020 7457 2020
Mark Garraway
Rosie Driscoll
NOTES FOR EDITORS
Renold is a global leader in the manufacture of industrial
chains and also manufactures a range of torque transmission
products which are sold throughout the world to a broad range of
original equipment manufacturers and distributors. The Company has
a well-deserved reputation for quality that is recognised
worldwide. Its products are used in a wide variety of industries
including manufacturing, transportation, energy, steel and
mining.
Further information about Renold can be found on the website at:
www.renold.com
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contact rns@lseg.com or visit www.rns.com.
END
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