A 20 per cent fall in adjusted operating profit to £125m isn't often a trigger for a double-digit share price surge. But given the worsening state of oil and gas markets, investors were relieved to hear that Rotork (ROR) managed to at least match the guidance it set out in last year's profit warning.
A slight improvement in fourth-quarter order intake also went down well, as did early signs that investments and cost-cutting measures are helping to mitigate the impact of a challenging trading backdrop. Chief executive Peter France accepts the depressed oil price and slowdown in China are far from ideal. But he's equally confident that the measures in place to tackle this downturn are capable of succeeding.
Although Rotork closed seven of its manufacturing facilities through the year, it opened new sales and services offices and spent £148m on six acquisitions. Making big investments in times of uncertainty has drawn criticism. Yet Mr France told us an expanding product portfolio will enable the engineer to better serve the few of its end markets still active. While deferrals and cancellations have taken place, he claims the group's flow control equipment continues to be used in some regions of the world.
Broker UBS expects pre-tax 2016 profit of £92.9m and EPS of 7.9p, down from £102m and 8.6p last year.
| ROTORK (ROR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 182p | MARKET VALUE: | £1.6bn | |
| TOUCH: | 181.7-182.2p | 12-MONTH HIGH: | 267p | LOW: 150p |
| DIVIDEND YIELD: | 2.8% | PE RATIO: | 21 | |
| NET ASSET VALUE: | 47p* | NET DEBT: | 17% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 448 | 113 | 93 | 37.3 |
| 2012 | 512 | 124 | 103 | 43.0 |
| 2013 | 578 | 138 | 115 | 48.1 |
| 2014† | 595 | 141 | 11.9 | 5.0 |
| 2015 | 546 | 102 | 8.6 | 5.1 |
| % change | -8 | -28 | -28 | +1 |
Ex-div: 7 Apr Payment: 16 May *Includes intangible assets of £341m, or 39p a share †EPS and DPS restated to reflect subdivision of 5p ordinary shares into 0.5p ordinary shares | ||||
