Ricardo Plc Regulatory News (RCDO)

Trading update

30 January 2025

Ricardo plc ("Ricardo"), a global strategic environmental and engineering consulting company, providing expertise at the intersection of transport, energy, and climate agendas, today announces its scheduled trading update ahead of the half-year results on 5 March 2025.

Ricardo executes strategic transformation for long-term value but delays in orders impact in the short-term

Accelerating our transformation

Ricardo recently completed two transactions, both of which support the Group in simplifying and focusing its portfolio on long-term sustainable growth. The acquisition of E3 Advisory (E3A), a leading Australian infrastructure advisory firm, offers Ricardo a compelling strategic opportunity that will add further scope to our Energy and Environment business and operational scale in Australia. At the same time, the timing of the disposal of Ricardo's Defense business has optimised cash for the Group, while accelerating its transition in line with its strategic priority of becoming a global leader in environment and energy-transition solutions.

Ricardo Defense

Following the disposal of the Defense business noted above, Defense will be reported as discontinued operations. After a peak year in FY23/24, lower volumes of its anti-lock brake system/electronic stability control (ABS/ESC) retrofit kits led to a decline in orders, revenue and operating profit compared to the prior year. Good growth continued in field services support and technical consulting.

Further progress in the first half within Ricardo's continuing operations

Order intake for Ricardo's continuing operations was up by 10% (11% at constant currency) for the six months to 31 December 2024 reflecting good progress in securing multi-year contracts. Order book was up 2% (3% at constant currency) compared to 31 December 2023. Reported year to date revenue increased by 1% (2% at constant currency).

Net debt

At 31 December 2024, net debt was £18.5m compared to £59.6m at 30 June 2024. This reflects the receipt of £64.3m on the disposal of Defense, net of transaction costs, and is prior to the payment of the consideration for E3 Advisory. While we retain a rigorous focus on working-capital management, our cash conversion has reduced significantly in the six-month period because of delayed R&D tax receipts, increased working capital in Defense and extended invoicing profiles on some large projects, with improvement expected in the second half.

FY 24/25 Outlook

Due to the delay in orders identified above we will be below consensus expectation for FY 24/25. We still expect to see good Group organic underlying profit growth for the year, in addition to the profit from the Acquisition of E3 Advisory. H2 will show good profit growth in EE, however due to the order delays described above, will be broadly flat for the full year. In A&I we will see growth in H2 profit compared to H1 as a result of the variable resourcing model that we established last year, but with lower order mix in emerging solutions we will see a decline in H2 profitability year-on-year.

Graham Ritchie, Chief Executive Officer, commented:

"Ricardo has demonstrated clear execution aligned to our strategic ambition. The two transactions support us in simplifying and focusing the Group's portfolio, while improving our long-term quality of earnings aligned to the environmental megatrends. By accelerating our transformation, we are creating long-term and sustainable value for all our stakeholders. 

"While we are seeing delays in orders resulting from short-term headwinds in some of our end markets, we are encouraged by the order intake across many of our businesses. We have recently won several key strategic contracts, particularly in our Energy and Environment business, which gives confidence in our continued growth over the medium term supporting both energy transition and environmental adaptation for climate change."

Half-year results

The results for the half-year ended 31 December 2024 will be released on 5 March 2025.

-ENDS-

About Ricardo plc

Ricardo plc is a global strategic, environmental, and engineering consulting company, listed on the London Stock Exchange. With over 100 years of engineering excellence and close to 3,000 employees in more than 20 countries, we provide exceptional levels of expertise in delivering innovative cross-sector sustainable outcomes to support energy transition and scarce resources, environmental services, together with safe and smart transport solutions. Our global team of consultants, environmental specialists, engineers, and scientists support our customers to solve the most complex and dynamic challenges to help achieve a safe and sustainable world. Visit www.Ricardo.com.

Investor contacts

Natasha Perfect

Ricardo plcTel 01273 455 611

Natasha.perfect@ricardo.com

Elisabeth Cowell

SECNewgate

Tel 0203 757 6882

Ricardo@secnewgate.co.uk