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Profits in the pipeline for Rotork

RESULTS: The bluest of the blue-chip engineers has delivered another double-digit increase in the dividend.
March 5, 2014

The most gratifying aspect of Rotork 's (ROR) beating consensus expectations for full-year earnings, says chief executive Peter France, is that it was achieved across all the group’s business segments. Shareholders will probably be just as enamoured by yet another double-digit increase in the valve-tap manufacturer's dividend. Rotork’s record order intake translated into adjusted operating profits of £151m (from £132m in 2012) on a margin up 40 basis points to 26.2 per cent.

IC TIP: Hold at 2785p

Worries that Rotork’s performance could suffer from its exposure to the oil and gas sector have proven unfounded, with sales from the division up by a quarter. Demand for the group’s actuators (valve-control devices) has surged as oil and gas drillers have come under increasing pressure to improve operational safety.

The group’s revenue growth was also augmented by a quartet of acquisitions made during the year, including the Schischek group of companies. But even like-for-like revenues were up 6 per cent on a constant-currency basis. The company's international expansion continues with yet another acquisition announced today: the group has agreed to buy Seoul-based valve and accessories manufacturer Young Tech for £64m in cash.

ROTORK (ROR)
ORD PRICE:2,785pMARKET VALUE:£2.4bn
TOUCH:2,784-2,791p12-MONTH HIGH:3,097pLOW: 2,331p
DIVIDEND YIELD:1.7%PE RATIO:24
NET ASSET VALUE:382p*NET CASH:£69m

Year to 31 DecTurnover ($bn)Pre-tax profit ($bn)Earnings per share (¢)Dividend per share (p)
2009 **354917428.4
2010 **381988132.5
2011 **4481139337.3
201251212410343.0
201357813811548.1
% change+13+11+12+12

Ex-div: 9 Apr

Payment: 19 May

*Includes intangible assets of £159m, or 183p a share *Excludes special dividends: 11.5p in 2011, 2010 and 2009.