Renold PLC Trading Update (1125C)
April 11 2017 - 2:00AM
UK Regulatory
TIDMRNO
RNS Number : 1125C
Renold PLC
11 April 2017
11 April 2017
Renold plc
("Renold", "the Company" or "the Group")
Trading Update
Renold, a leading international supplier of industrial chains
and related power transmission products, today issues a trading
update ahead of reporting results for the year ended 31 March 2017,
on 30 May 2017.
Reported revenue for the full year is expected to be 11.1% ahead
of the reported revenue for the prior year benefitting from foreign
exchange tailwinds and continued strong performance of the tooth
chain business acquired in December 2015.
The Group's Adjusted Operating Profit(2) for the second half of
the year is expected to be slightly ahead of that reported for the
first half of the year. We therefore expect to report results for
the full year in line with market expectations.
Trading
Underlying(1) revenue growth of approximately 3.1% for the
second half of the year is a significant improvement over the 4.0%
decline reported for the first half of the year. Underlying(1)
growth in the second half of the year reflects organic and
acquisition growth in the European chain operations combined with a
partial recovery of revenue in Torque Transmission. However, market
conditions in the non-European chain operations, particularly in
the Americas and Australasia, provided a drag to the growth
experienced elsewhere. Overall, for the full year, underlying(1)
revenue is expected to be broadly flat.
Order intake improved through the year with a book to bill
ratio(3) for second half of the year at 103% compared with 101% for
the first half of the year. The order book at 31 March 2017 was
9.0% higher than at the prior year end (at constant exchange rates)
demonstrating the combined effect of revenue growth in the second
half and the improving book to bill ratio.
Overheads increased in the year as we raised expenditure on
sales and marketing, supporting the organic growth phase of our
strategic plan. Self-help measures continue to be delivered, with
the successful transfer of the European Distribution Centre to
Germany and the consolidation of our UK couplings manufacturing
facilities in the year. We expect these restructuring actions to
contribute towards greater efficiency in the new financial
year.
Net debt
Net debt finished the year at GBP17.4m (2016: GBP23.5m). Cash
generation benefited from proceeds from the disposal of properties
in France and Australia off-setting the investment in plant &
equipment and the costs of restructuring incurred during the
year.
Robert Purcell, Chief Executive of Renold, said:
"Whilst market conditions have remained volatile, we have not
allowed this to stand in the way of our delivery of the Step2020
Strategic Plan. We continue to invest in sales and marketing to
support further organic growth as part of Phase II of that plan. We
are making good progress and the improving order book gives us
confidence that we can continue towards our objective of delivering
mid-teens operating margin.
European markets are improving, but trading conditions in North
America remain challenging. Nevertheless, we continue to pursue our
strategy, and, with early signs of improvement in end-customer
markets, we look forward more confidently to the future."
(1) The use of "underlying" excludes the impact of changes in
foreign exchange rates.
(2) Adjusted Operating Profit excludes exceptional items, the
costs of administering closed defined benefit pension schemes and
the amortization of acquired intangibles.
(3) The Book to Bill ratio is the ratio of order intake in the
period to sales for the same period.
ENQUIRIES:
Renold plc Tel: 0161 498 4500
Robert Purcell, Chief Executive
Ian Scapens, Group Finance Director
Arden Partners (Broker) Tel: 020 7614 5917
Chris Hardie
Instinctif Partners (Public Relations) Tel: 020 7457 2020
Mark Garraway
Helen Tarbet
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, end users 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
This information is provided by RNS
The company news service from the London Stock Exchange
END
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