RENOLD15 Oct 2019 00:44
As part of the focus on optimising returns, Renold disposed of its non-strategic South African Torque Transmission business unit to its management team in late September, for nominal consideration.
That business unit, which generated revenue of £0.8m and a small operating loss in the first half, had continued to struggle in an increasingly challenging South African market and would require "significant" capital investment and management input to make meaningful progress, the board claimed.
The disposal to management would provide a continuing channel to market for products sourced from elsewhere in the group.
Recent order intake trends suggested that current market weakness would continue into the second half of the year.
However, as the company had previously indicated, it was expecting the second half to benefit from an increasing contribution from the ongoing ramp-up in efficiency at the new China factory, together with further cost reduction activities across the group resulting in a more equal weighting between the first and second halves of the year.
As a result, and assuming no significant further deterioration in trading conditions, the group said it remained on track to deliver an overall result for the full year in line with the board's expectations.
"Our ongoing focus on delivering improvements in the underlying business structure and operations has helped to mitigate the impact of volatile market conditions," said chief executive officer Robert Purcell.
"The sale of our South African business unit to management secures a continued route to market for the group's products in the region permitting us to focus our capital investment in other markets with greater opportunities....
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