Renold PLC Trading Update (3654T)
12 October 2017 - 5:00PM
UK Regulatory
TIDMRNO
RNS Number : 3654T
Renold PLC
12 October 2017
Renold plc
("Renold", "the Company" or "the Group")
Period End Trading Update
12 October 2017
Renold, a leading international supplier of industrial chains
and related power transmission products, today issues a period end
trading update covering the six months ending 30 September 2017
(the 'period') ahead of announcing interim results on 14 November
2017.
Trading in the period has been mixed. The Torque Transmission
division performed in-line with expectations. The Chain division
delivered organic growth, but profitability was affected by machine
break-downs at our Einbeck facility and by sustained increases in
raw material costs.
Consequently, the Board now expects adjusted operating profit(1)
for the Group for the year to 31 March 2018 to be slightly below
the lower end of the current range of analyst forecasts.
Group revenue in the period grew by 8.0% and on an underlying(2)
basis by 2.7%, compared to the first half of the prior year. Order
intake in the period grew by 9.9% on an underlying basis or 6.1%
excluding the element of the large UK Couplings order which extends
beyond the current financial year.
The Torque Transmission division delivered growth in underlying
revenue of 6.3%. Including the major project win for UK Couplings,
underlying order intake increased by 27.4%.
The Chain division delivered strong year on year underlying
revenue growth of 8.2% in Q1 of the financial year. However, in Q2,
major machine break-downs at our Einbeck, Germany facility reduced
availability of key product lines. This resulted in increased
shipping and maintenance costs to mitigate the impact on key
customers in Europe and the US and led to a Q2 revenue decline of
4.5% and underlying revenue growth of 1.8% for the period.
As noted in the AGM statement in July, the Group, particularly
the Chain division, experienced sustained increases in raw material
costs, notably in respect of steel. Sales price increases have been
implemented to pass on these costs and are visible in the order
book. Margins in the period have been impacted by the lag between
raw material increases being incurred and sales price rises working
through the order book. As a result of this, and the costs of
machine break-downs, adjusted operating margin for the Chain
division for the first half is expected to be around 8%.
Underlying order intake for the Chain division improved to 9.0%
in Q2 resulting in an overall growth for the period of 5.3%.
Performance in the division is expected to improve in the second
half, with the issues at Einbeck now resolved and price increases
in the order book feeding into revenues.
The Torque Transmission division remains on track to perform in
line with the Board's expectations.
Robert Purcell, Chief Executive of Renold, said:
"It has been a frustrating first half for the Chain Division.
Organic growth opportunities, particularly in Europe, have been
converted but have failed to deliver the expected improvements in
profitability due to issues at Einbeck and the rise in raw material
prices. Management actions to address these issues are expected to
benefit the second half of the year.
"The Torque Transmission division continues to make progress in
line with expectations. The consolidation of our Halifax and
Cardiff plants into a single UK Couplings business unit is starting
to deliver the planned benefits, with more opportunity for
improvement in the future."
(1) Adjusted operating profit excludes exceptional items, the
costs of administering closed defined benefit pension schemes and
amortisation of acquired intangibles.
(2) 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
Arden Partners 020 7614 5917
Chris Hardie
Instinctif Partners 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 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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