Last checked at 20 Jul 2016 07:00
Renold plc
("Renold", "the Company" or "the Group")
AGM Statement
Renold, a leading international supplier of industrial chains and related power transmission products, is today issuing, ahead of its Annual General Meeting to be held at 11:00am, the following statement in respect of the first quarter of the financial year ending 31 March 2017 ('the Quarter').
The Quarter saw overall Group performance in line with expectations. Order intake improvements support the Board's stated expectation of an end to sales declines from the second half of this financial year. As expected, underlying (1) sales in the Quarter were down 9.6% which represents a recovering trend, especially in Chain, from the 11% fall in the second half of the prior year.
Underlying Group order intake was 3.1% better than the same period in the prior year with Chain 3.1% ahead and Torque Transmission 3.3% ahead. In Chain, Europe, Australasia and China all delivered growth in underlying order intake. The Americas fell primarily as a result of distributor de-stocking. The trend, however, is an improving one with the fall in the Americas' order intake lower than the previous three quarters. The book to bill ratio for the Group in the Quarter was 110% compared to 96% in the first quarter of the prior year. Underlying orders were £4.0m above underlying sales. In Chain the Book to Bill ratio was 108% (99% in the prior year) and in Torque Transmission 119% (88% in the prior year).
It will take time for the full economic and currency implications of the Brexit vote to become clear. However, almost 40% of the Group's external sales are made in the Americas, just under 20% in the continental EU countries and only 8% in the UK. The Group has also not experienced any adverse impact from distributor de-stocking in Europe in the Quarter which had been a feature of the second half of the prior year.
The Group continues to implement STEP 2020 strategic initiatives and to invest in new capital equipment. In addition, the integration of the acquired Tooth Chain business continues to proceed smoothly and the business has generated modest growth in order intake and sales compared to the same period prior to the acquisition by Renold.
Improving order intake supports an improving outlook for sales in the second half. Continued delivery of STEP 2020 initiatives will add further support to the Group's results. The outlook for the first half and the full year adjusted (2) operating profit therefore remain in line with the Board's expectations.
Robert Purcell, Chief Executive of Renold, said:
"Uncertainty and volatility in external markets have been met with the continued delivery of our STEP 2020 Strategic Plan. The Chain division is seeing welcome early signs of lower volatility. The strong growth in Torque Transmission order intake in the period points to an improved outlook for the second half.
We continue to invest in growth related activities focussed on expanding our sales foot print and new product development. Multiple initiatives are also underway, focussed on efficiency gains and our cost base to improve further our operational gearing. STEP 2020 remains a robust platform to deliver our goal of mid-teens operating margins."
20 July 2016
(1) The use of "underlying" excludes the impact of changes in foreign exchange rates by retranslating the prior year comparative figures to the current year exchange rate.
(2) Adjusted items exclude exceptional items, the costs of administering closed defined benefit pension schemes, the amortization of acquired intangibles and any associated tax thereon.
ENQUIRIES:
Renold plc | 0161 498 4500 |
Robert Purcell, Chief Executive |
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Brian Tenner, Finance Director |
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Arden Partners | 020 7614 5917 |
Chris Hardie |
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Instinctif Partners | 020 7457 2020 |
Mark Garraway |
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Helen Tarbet |
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NOTES FOR EDITORS
Renold is a global leader in the manufacture of industrial chains and also manufactures a range of torque transmission products which are sold throughout the world to a broad range of original equipment manufacturers and distributors. The Company has a well deserved reputation for quality that is recognised worldwide. Its products are used in a wide variety of industries including manufacturing, transportation, energy, steel and mining.
Further information about Renold can be found on the website at: www.renold.com