Rotork (ROR) had a slow first quarter, but a slew of orders came through later in the half, justifying management's confidence in hitting targets. Every division at the valve control systems group generated record sales and profits, and 9 per cent growth in order intake had the order book above £208m, another best and enough, management thinks, to drive an even better second half. The shares soared 8 per cent, but the valuation remains a worry.
Strip out acquisitions and currency benefits and profit grew a more modest 6 per cent to £65.2m on revenue up 5 per cent. A quiet Indian power market meant underlying profit fell 2 per cent in constant currencies (as against a 5 per cent reported gain) at the controls division, Rotork's biggest profit generator. Big coal-bed methane projects won last year in Australia were not repeated, either. Still, working through orders will benefit second-half sales and an uptick in Indian power has been spotted in recent weeks.
Fluid power was the star performer and offset weakness in controls. Its focus on the booming oil and gas industry is generating strong demand for pneumatic and hydraulic valve actuators. Revenue there jumped by a fifth, cost savings helped grow margins by 300 basis points and operating profit leapt by half. Targeting oil refineries and other business in Asia will only help here.
Broker UBS expects adjusted pre-tax profit of £145m and adjusted EPS of 126p this year (from £124m and 108p in 2012).
ROTORK (ROR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 2,913p | MARKET VALUE: | £2.53bn | |
| TOUCH: | 2,909-2,916p | 12-MONTH HIGH: | 3,097p | Low: 2,129p |
| DIVIDEND YIELD: | 1.5% | PE RATIO: | 27 | |
| NET ASSET VALUE: | 342p* | NET CASH: | £39.4m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 246 | 58.1 | 47.8 | 16.4 |
| 2013 | 276 | 63.6 | 52.8 | 18.05 |
| % change | +12 | +9 | +10 | +10 |
Ex-div: 28 Aug Payment: 27 Sep *Includes intangible assets of £162m, or 187p a share | ||||
