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Trading statements

Renold reports improving order intake

19 July 2017 07:16

Renold said improving order intake in the final quarter of the previous year was converted into growth in underlying revenue in the first quarter of the new financial year of 6.6%, largely as a result of an 8.2% revenue increase delivered in the Chain division.

As expected, underlying revenue in the Torque Transmission division was more stable, with growth in the quarter of 0.5%.

The group experienced sustained increases in raw material costs during the first quarter primarily in respect of steel.

Sales price increases were implemented in response and will help to mitigate the effect on operating margin once orders at the new prices have been delivered.

Order intake in the quarter was 11.4% ahead of revenue in the same period (book to bill ratio), benefitting from a major project win in UK Couplings, which will deliver total revenue of approximately £5.4m over several years, including circa £1.5m in the current financial year.

Excluding the value of orders on this project which generate revenue beyond the current financial year, order intake was 4.7% ahead of revenue (or 1.6% ahead excluding the all orders from this project).

Progress continued to be made on implementing the STEP 2020 strategy, with the final stage of the UK Couplings consolidation, being the sale of the Halifax property, and the closure of a small Torque Transmission manufacturing site in China, being completed in the quarter.

The planning and preparation for the relocation of the Chinese chain manufacturing facility continues on plan with the land purchase completed in June 2017 and the construction phase due to commence next month.

The group remains on track to deliver a result for the full year in line with the Board's expectations.

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