Ricardo had lower financing costs to thanks for a sharp jump in reported profits, when in fact underlying operating profit growth was much more sedate at 6 per cent as a result of difficulties in its strategic consulting business, which swung from a £1m operating profit a year earlier to a £0.3m loss.
Profits were also lower at its performance products division at £2.3m – versus £3.2m a year earlier – although with the McLaren supercar engine and Foxhound military vehicle entering full production that should be reversed as the year progresses. The consulting engineer also reported good progress with its order book, which climbed 15 per cent in the half to hit a record £123m, and is set to rise further thanks to a healthy pipeline of new orders. That's a reflection of the success Ricardo has enjoyed in actively expanding its range of target markets and sectors, as well as an uptick in automotive enquiries. Ricardo's consultancy services are also benefiting from ever more stringent emissions legislation due to come into force in Europe in 2013, which, along with a focus on improving fuel efficiency, drove higher levels of work with passenger vehicle manufacturers.
Broker Investec anticipates adjusted pre-tax profits of £16.2m and EPS of 26.3p this year (from £15.4m and 29.7p in 2011).
| RICARDO (RCDO) | ||||
|---|---|---|---|---|
| ORD PRICE: | 380p | MARKET VALUE: | £197m | |
| TOUCH: | 380-386p | 12-MONTH HIGH: | 420p | Low: 325p |
| DIVIDEND YIELD: | 3.1% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 164p* | NET CASH: | £2.4m | |
| Half-year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 90.2 | 5.0 | 9.4 | 3.4 |
| 2011 | 92.2 | 6.3 | 10.5 | 3.7 |
| % change | +2 | +26 | +11.4 | +9 |
Ex-div: 7 Mar Payment: 10 Apr *Includes intangible assets of £22.2m, or 43p a share | ||||
