Renold PLC Trading Update (7003P)
October 14 2019 - 2:00AM
UK Regulatory
TIDMRNO
RNS Number : 7003P
Renold PLC
14 October 2019
Renold plc
("Renold", "the Company" or "the Group")
Period End Trading Update
14 October 2019
Renold, a leading international supplier of industrial chains
and related power transmission products, today issues a period end
trading update covering the six months ended 30 September 2019 (the
'period') ahead of announcing interim results on 13 November
2019.
The ongoing focus on operational efficiency is helping to offset
the impact of a challenging market environment and, assuming no
significant further deterioration in trading conditions, the Group
remains on course to deliver a result for the full-year in line
with the Board's expectations.
Following a stable first quarter of the year, macro-economic
conditions weakened during the second quarter and Group
underlying(1) revenue for the period declined by 3.2% versus the
same period in the prior year. On a reported basis, revenue
benefited from a strengthening of the US dollar and declined by
0.7%. The underlying decline in revenue most significantly reflects
a deterioration in the industrial goods sector, impacting demand
from distributors and OEMs in the Group's key European and US
industrial chain markets during the late summer period.
Order intake in the period also reflected the more challenging
market conditions with a decline of 8.5% on an underlying(1) basis,
with orders 2.4% behind revenue for the period.
Despite the backdrop, the Group continues to see the benefits of
improved operational efficiency as a result of its strategic
initiatives and ongoing investment. In addition, proactive cost
action is underway to align the business with demand levels and
help mitigate the impact of market weakness.
As part of the focus on optimising returns, the Group disposed
of the non-strategic South African Torque Transmission business
unit to its management team in late September for nominal
consideration. This business unit, which generated revenue of
GBP0.8m and a small operating loss in the period, has continued to
struggle in an increasingly challenging South African market and
would require significant capital investment and management input
to make meaningful progress. The disposal to management will
provide a continuing channel to market for products sourced from
elsewhere in the Group.
Recent order intake trends suggest that current market weakness
will continue into the second half of the year. However, as
previously indicated, the Group expects the second half to benefit
from an increasing contribution from the ongoing ramp-up in
efficiency at the new Chinese factory, together with further cost
reduction activities across the Group resulting in a more equal
weighting between the first and second halves of the year.
As a result, and assuming no significant further deterioration
in trading conditions, the Group remains on track to deliver an
overall result for the full year in line with the Board's
expectations.
Robert Purcell, Chief Executive, said:
"Our ongoing focus on delivering improvements in the underlying
business structure and operations has helped to mitigate the impact
of volatile market conditions. The sale of our South African
business unit to management secures a continued route to market for
the Group's products in the region permitting us to focus our
capital investment in other markets with greater opportunities.
"Whilst market conditions remain challenging in the near term,
we are encouraged by the positive impact of our ongoing strategic
initiatives and this underpins our confidence in the long term
opportunity for Renold."
1. The use of "underlying" excludes the impact of changes in
foreign exchange rates by retranslating the prior year comparative
figures to the current year exchange rate.
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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END
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