A key detail in the interim results for Ricardo (RCDO) was the post-period growth in the engineer’s order book to a new record high of £152m - a 10 per cent uplift since the year-end.
This strong start to the second half follows a solid interim performance from the technical consulting division, which saw underlying profits climb 23 per cent to £6.9m and profit margins edge up 110 basis points to 7.7 per cent. That stabilised overall group profits after the performance product division posted a dip in underlying operating profits from £4.2m to £3.7m. The unit became more reliant on lower-margin revenues from McLaren engine programmes as work on monorail transmissions and defence vehicles ebbed away.
Ricardo, which recently celebrated its centenary, is broadening its range of products and consulting services to focus on both public and private companies' need to reduce carbon emissions and become more energy efficient. It has created a wholly-owned US defence subsidiary after encouragement from the US government to develop a top-secret product development division. A £10m contract win from a Chinese car company in January also suggests a patient push into Asian markets is paying off.
Broker Investec forecasts normalised EPS of 41.1p this year, rising to 43.7p in 2016, based on pre-tax profits of £26.5m and £28.3m, respectively.
| RICARDO (RCDO) | ||||
|---|---|---|---|---|
| ORD PRICE: | 721p | MARKET VALUE: | £378m | |
| TOUCH: | 715-720p | 12-MONTH HIGH: | 800p | LOW: 600p |
| DIVIDEND YIELD: | 2.2% | PE RATIO: | 19 | |
| NET ASSET VALUE: | 208p* | NET CASH: | £11m | |
| Half-year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 112 | 8.8 | 13.9 | 4.3 |
| 2014 | 121 | 9.0 | 14.2 | 4.65 |
| % change | +8 | +2 | +2 | +8 |
Ex-div: 19 Mar Payment: 7 Apr *Includes intangible assets of £45.5m, or 87p a share | ||||
