Our partner Ricardo doing well17 Jan 2014 14:49
CAP's co-operation partner Ricardo is doing well, so could have a knock-on effect - the Telegraph's Questor has this analysis today:
"BRITISH engineering group Ricardo ticked every box for a great investment last time Questor looked at the shares. The company (Ricardo) has market-leading technical expertise that is protected by patents and recognised worldwide, the order book is growing, and the work is profitable and highly cash-generative.
Ricardo has not disappointed since then. The group completed the biggest deal in its history when it signed a long-term supply deal worth £40m a year with the Formula 1 group and supercar maker McLaren on December 20.
Dave Shemmans, chief executive, yesterday updated the market on trading during the first six months ended December 31. A contract with a European motorcycle company and work on passenger cars in the US, China, Japan and UK were all added during the period. Ricardo said what was particularly encouraging was winning business in the US and Germany, where work has been slow.
Mr Shemmans thinks there is more to come: “With a solid order book within both Technical Consulting and Performance Products and an encouraging order pipeline, we remain confident of further progress in the second half of the year.”
The second half is typically the strongest period for Ricardo, and market consensus is for revenue for the full-year ended June to increase 10pc to £254m, pushing pre-tax profits up 17pc to £24.5m, and earnings per share of 38.2p.
In the most recent detailed trading update in November, Ricardo was not only increasing sales but also working to drive profit margins higher. This is exciting because as more work goes through the business at higher margins, the profit growth will accelerate.
The engineering group’s orders are about 50pc domestic, with the remainder split almost evenly between the US, Germany and Asia. This plugs the group into a stable UK, recovering US and fast-growing Asian markets.