Winter storm damage to the rail network brought a surge of work for Renew's (RNWH) rail business in the first half. As the only national provider of engineering maintenance services to Network Rail, Renew was busy patching up the network, including the high profile collapsed track at Dawlish.
Bad weather is also good news for another of Renew's specialisms: environmental engineering. Renew - which holds framework contracts with several water companies - says flood protection spending has picked up as the issue has leapt up the political agenda. Work in the energy sector has also been healthy, with Renew hitting record revenue at its Sellafield nuclear business.
Management tells us these buoyant market conditions drove organic growth up to around 20 per cent in the engineering services division. While the group may struggle to match such an impressive run rate in the current half, organic growth for the full year should still be in the double digits.
The outlook is solid: the engineering services order book is up almost a fifth to £306m. And Renew has added another string to its bow since the end of the first half with the acquisition of Clarke Telecom, which brings a presence in wireless telecoms infrastructure.
Numis expects adjusted pre-tax profit of £14.7m for the full year, giving earnings per share of 18.5p (from £10.1m and 13.9p in 2013s).
RENEW HOLDINGS (RNWH) | ||||
|---|---|---|---|---|
| ORD PRICE: | 243p | MARKET VALUE: | £149m | |
| TOUCH: | 240-245p | 12-MONTH HIGH: | 251p | LOW: 91p |
| DIVIDEND YIELD: | 1.6% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 22p* | NET CASH: | £8.1m | |
| Half-year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 152 | 4.3 | 5.3 | 1.1 |
| 2014 | 226 | 6.9 | 8.8 | 1.5 |
| % change | +48 | +58 | +67 | +36 |
Ex-div: 4 Jun Payment: 7 Jul *Includes intangible assets of £36m, or 59p a share | ||||
