(Alliance News) - Rotork PLC on Tuesday reported a higher annual profit as a result of lower costs and expenses amid a restructuring programme.
Shares in Rotork were up 4.0% at 291.00 pence in London in morning trading.
While revenue fell 3.8% in 2019 to GBP669.3 million from GBP695.7 million the year before, the electric, pneumatic and hydraulic valves manufacturer posted a 2.8% higher pretax profit of GBP124.1 million versus GBP120.7 million.
To begin with, cost of sales fell 6.8% to GBP357.7 million from GBP384.3 million so that gross profit was higher in 2019 at GBP311.6 million compared to GBP311.5 million. On top of this, distribution costs fell 12% to GBP6.4 million from GBP7.3 million.
Moreover, administrative expenses also dropped by 4.9% to GBP180.4 million from GBP189.6 million and other expenses shrank 19% to GBP649,000 from GBP798,000.
The company's margin rose by 160 points to 22.6%, thanks in large part to its "growth acceleration programme" aimed at optimising Rotork's manufacturing footprint, rationalising its supply chain, and upgrading IT infrastructure.
"Our initiatives to accelerate long-term growth have gained good traction, with the roll-out of a sales organisation focused on end markets (as opposed to product groups) now largely complete, and a group-wide reorganisation of the new product development process now implemented," said Rotork.
Rotork is recommending a final 3.9 pence per share dividend, taking the total per share for the year up 5.1% to 6.2p from 5.9p.
Chief Executive Kevin Hostetler said: "Our growth acceleration programme is on track and progress in 2019 was very encouraging. The year was about margin improvement, cash generation and laying the foundations for sales acceleration. We made excellent progress on all pillars of the programme, including sales force re-alignment to end markets, lean initiatives, purpose and values launches and our IT solution design. We remain committed to delivering sustainable mid to high single digit revenue growth and mid 20s adjusted operating margins over time.
"Looking ahead, it is too early to assess fully the potential impacts of COVID-19. Absent these, we were planning for modest sales growth on an [organic constant currency] basis and margin progress in 2020, driven by further benefits of our growth acceleration programme albeit with margin progress more gradual, reflecting our investment plans."
By Anna Farley; annafarley@alliancenews.com
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Rotork (ROR)