Last checked at 16 Jan 2009 07:00
Renold plc
("Renold", the "Group" or the "Company")
Interim Management Statement
Renold is today issuing its interim management statement covering the period from 1 October 2008 to the current date.
Order intake and sales in the third quarter commencing 1 October 2008 were ahead of the same period last year at actual rates of exchange. On a constant currency basis, however, order intake was below that during the comparable period with December showing a significant decline. Consequently, as at 31 December 2008, the closing order book was 28% ahead of last year at actual rates of exchange and, on a constant currency basis, was in-line with last year.
Whilst the forward order book is in-line with expectations and leads us to believe we will trade both cash flow positively and profitably in the final quarter of the financial year ending 31 March 2009, the final quarter has historically had a significant impact on the Group's overall results for the year. The decline in order intake, particularly with regard to short-term business, means an accurate view of the effect on the year is not currently possible although the Board believes that pre-exceptional operating profit for the year will be not less than £10 million (2008: £12.0 million).
The Group is proactively reducing operating expenditure, working capital and capital expenditure to ensure that the business remains competitive in the prevailing environment. To this end, 350 positions (approximately 12 per cent of the Group's employees) have been made redundant and further actions are underway.
Operationally, the integration of Renold Chain India, the chain business of L.G. Balakrishnan which was acquired in September 2008, is proceeding to plan and post acquisition performance is in-line with expectations.
The Group is expecting to see a benefit from the recent reduction in raw material prices.
The majority of the Group's US Dollar and Euro foreign exchange currency exposures for the financial year ending 31 March 2010 have been hedged in accordance with Renold's treasury policy. These contracted rates will result in more favorable exchange rates being experienced in the financial year ending March 2010 than in the current financial year.
Due to exceptional volatility in foreign exchange rates in recent months, we have maintained the financial hedges of foreign currency denominated assets through borrowings entered into by overseas subsidiaries and by foreign currency borrowings in the UK designated as hedges of the overseas net investments.
As a result of the movement in exchange rates during the third quarter, the Sterling value of the underlying assets has increased and there has been a similar increase in the Sterling value of borrowings. In the event that the prevailing exchange rates continue, whilst net debt will decline in the second half year from operating cash flow, it would be inflated to higher than previously anticipated levels as a result of these exchange rates.
There have been no other significant changes in the position of the Company over the period since the publication in November 2008 of its half year statement for the six month period ended 30 September 2008.
Overall the Board remains satisfied with the progress being made and actions being taken.
16 January 2009
ENQUIRIES:
| Renold plc | 0161 498 4500 |
| Bob Davies, Chief Executive | |
| Peter Bream, Finance Director | |
| College Hill | 020 7457 2020 |
| Mark Garraway | |
| Adam Aljewicz |
NOTE FOR EDITORS
Renold is a global leader in the manufacture of industrial chains and also manufactures a range of gears and couplings which are sold throughout the world to a broad range of original equipment manufacturers and distributors. Its products are used in a wide variety of industries including manufacturing, transportation, energy, steel, and mining. Renold has a well deserved reputation for quality that is recognized worldwide.
Renold has 15 manufacturing plants throughout the world. It is currently expanding its geographical footprint by increasing its manufacturing presence in "low cost countries".
Further information about Renold can be found on the website: www.renold.com