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Trading statements

Renold says Q1 in line, FD Brian Tenner to leave

20 July 2016 07:53

Renold said its first quarter to March 31 saw overall group performance in line with expectations. It said the outlook for its H1 and FY adjusted operating profit remain in line with directors' views.

Separately, Renold said FD Brian Tenner intends to leave the company when a successor is found.

Returning to the company's trading statement, Renold said 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 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," it said.

"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 operating profit therefore remain in line with the Board's expectations."

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