Renold (RNO) has achieved the seemingly impossible: it's making industrial chains look sexy. Established for over 100 years, Renold was looking a little tarnished. But a new management team has shaken things up and a turnaround plan is delivering sparkling results.
Underlying revenue dropped 2 per cent year-on-year to £184m as patchy European demand and weakness in Australia weighed. But Renold demonstrated it can grow earnings even without top-line growth. Underlying earnings per share more than doubled to 3.2p as the cost-cutting phase of the turnaround plan kicked in "We're not relying on the macro situation; it's about helping ourselves," says chief executive Robert Purcell.
Exceptional costs of almost £12m, primarily relating to the Bredbury plant closure, hit reported profits. But net debt rose only marginally, despite the £7.2m cash cost of Bredbury. Management tells us that they will move into the organic growth phase of the turnaround by the end of the current financial year. Beyond that, a stronger balance sheet could be used to fund acquisitions; something that Mr Purcell described as being "the cherry on top of the icing".
Broker Arden Partners raised its 2014-15 adjusted earnings per share forecast by 7 per cent to 4.5p (from 3.2p in 2013-14), with 5.3p expected for 2015-16.
| RENOLD (RNO) | ||||
|---|---|---|---|---|
| ORD PRICE: | 57p | MARKET VALUE: | £127m | |
| TOUCH: | 56-58p | 12-MONTH HIGH: | 69p | LOW: 19p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 7p* | NET DEBT: | 137% | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 156 | -13.6 | -8.0 | nil |
| 2011 | 191 | -1.3 | -0.4 | nil |
| 2012 | 210 | 7.6 | 2.8 | nil |
| 2013 | 190 | -11.9 | -5.4 | nil |
| 2014 | 184 | -5.9 | -4.9 | nil |
| % change | -3 | - | - | - |
* Includes intangible assets of £26m, or 12p a share | ||||
