The benefits of an ongoing restructuring programme at Renold (RNO) helped half-year adjusted operating profit to rise 42 per cent to £5.1m. The group supplies industrial chains and related power transmission products and is working through a three-phase plan - which includes a significant measure of self help - in order to deliver double-digit adjusted operating margins, even if sales growth is negligible.
Of the changes introduced, excess capacity in the chain division led to the closure of the Bredbury facility, with production being redistributed to other plants - that's expected to deliver an annual £3.2m operating profit gain.
Trading conditions, meanwhile, continued to improve steadily - group order intake did fall 0.2 per cent, but this represents a significant advance over the previous two half-year periods when orders fell 4 per cent and 12 per cent, respectively. In the chain division, underlying revenue slipped 1 per cent, but operating profit nearly doubled to £4.3m thanks to cost reduction efforts, and the operating margin there grew from 3.1 per cent to 6 per cent. In the smaller torque transmission operation, underlying revenue fell 6 per cent, although a change in the product mix left the operating margin there unchanged at 12.4 per cent.
Broker finnCap expects full-year adjusted pre-tax profit of £8m, giving EPS of 2.9p (from £4.4m and 1.5p in 2013).
| RENOLD (RNO) | ||||
|---|---|---|---|---|
| ORD PRICE: | 42p | MARKET VALUE: | £94m | |
| TOUCH: | 41-42p | 12-MONTH HIGH: | 47p | LOW: 17p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 11p* | NET DEBT: | 80% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 96.7 | 0.40 | 0.20 | nil |
| 2013 | 95.6 | 1.10 | nil | nil |
| % change | -1 | +175 | -100 | - |
Ex-div: - Payment: - *Includes intangible assets of £20m, or 9p a share | ||||
