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(Alliance News) - Renold PLC on Tuesday reported a 53% drop in financial 2020 pretax profit as weak market conditions were further disrupted by the Covid-19 pandemic in the final month of the financial year.
The industrial chains and torque transmission products also said that it is unable to give specific guidance for financial 2021 and has decided against declaring a dividend for financial 2020, given the volatile operating environment created by the virus outbreak.
Shares in Renold were trading 36% higher at 9.82 pence each in London on Tuesday morning.
For the year to March 31, the Manchester-based company recorded pretax profit of GBP4.9 million, down sharply from GBP10.4 million a year ago. On adjusted basis, pretax profit fell 20% to GBP8.2 million.
Annual revenue dipped 5.1% to GBP189.4 million from GBP199.6 million.
"The initial disruption resulting from the Covid-19 related extended shutdown across China impacted our manufacturing capability and supply of chains in certain markets. As lockdowns spread across the world in the final weeks of our financial year, Renold, like many other businesses, experienced manufacturing disruption, either from enforced closure of manufacturing sites or due to increased absence as employees self-isolated or had childcare responsibilities," Renold said.
The company's Chain division saw a 7.6% drop in revenue to GBO151.4 million due to weakening market conditions through financial 2020, with the most significant impact in the key European and US markets.
Revenue at the Torque Transmission unit increased 6.4% year-on-year to GBP38.0 million. The rise was attributed to revenue phasing of the large multi-year couplings contract combined with strong growth in key customer projects in the US.
On Covid-19 impact, Renold said all of its manufacturing sites are now operational, although some at reduced capacity and its supply chain remains resilient.
Chief Executive Officer Robert Purcell said: "The uncertainty caused by the Covid-19 pandemic is likely to result in a period of volatile demand, preventing the board from giving specific guidance for the year ahead at this stage. Together with the cost and cash actions taken, this supports the board's confidence that the group will be able to manage through the current period of disruption."
By Tapan Panchal; tapanpanchal@alliancenews.com
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