A weak oil price and geopolitical uncertainty in key markets conspired to send order intake at Rotork (ROR) tumbling a tenth to £274m, as project deferrals and cancellations took their toll. The maker of actuators for gearboxes and pneumatic instruments has taken a battering due to its large exposure to oil and gas markets, but the good news on offer was enough to send its shares up 4 per cent.
Indeed, given that half of Rotork's revenue comes from oil markets, these results don't actually look too bad. Oil and gas revenue fell by £15m, but a strong showing from its instruments division helped mitigate that decline. The unit delivered a 65 per cent increase in adjusted operating profit to £9m and grew order intake by 59 per cent.
That progress was bolstered by investment in its sales subsidiaries, a key part of Rotork's drive to deliver organic sales growth. Meanwhile, acquisitions, such as the €9.7m (£6.9m) deal for solenoid valves business M&M International that accompanied these results, are seen as a crucial way to add products and expand into new geographies.
In response to the oil and gas slowdown, Rotork is gearing up to deliver annual savings of £8m by freezing recruitment and combining certain facilities. Broker Numis Securities has slashed its forecasts and now expects adjusted EPS of 11.8p this year, down from 13.2p in 2014.
| ROTORK (ROR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 226p | MARKET VALUE: | £2bn | |
| TOUCH: | 225.4-226p | 12-MONTH HIGH: | 289p | LOW: 207p |
| DIVIDEND YIELD: | 1.4% | PE RATIO: | 20 | |
| NET ASSET VALUE: | 44p* | NET CASH: | £37.2m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p)† | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 279 | 61.5 | 5.2 | 1.92 |
| 2015 | 274 | 56.3 | 4.8 | 1.95 |
| % change | -2 | -8 | -7 | +2 |
Ex-div: 27 Aug Payment: 25 Sep **Includes intangible assets of £207m, or 24p a share †Restated to reflect subdivision of 5p ordinary shares into 0.5p ordinary shares | ||||
