All of Rotork's (ROR) four divisions made more money and won more new business than ever before last year, leaving the maker of valve actuators and control systems with a bulging order book. Still, the weak euro and slow power markets left earnings shy of consensus forecasts and the highly rated shares, up 50 per cent since June, trade on a punchy multiple.
Acquisitions offset a £13m currency headwind while a steady profit margin, of almost 26 per cent, drove adjusted operating profit up 14 per cent to £131.9m. Orders rose 17 per cent to over £539m and Rotork ended the year with a record £181m of business on its books. Fluid Systems grew the fastest, driven by strong demand from oil and gas companies and a big retro-fit job in Mexico. That meant a better than expected 240 basis point surge in the margin there to 15.3 per cent and profits rose by almost half to £24.6m. Oil and gas already accounts for 54 per cent of the business and will remain a crucial driver given the boom in shale and coal seam methane exploration.
However, growth at Rotork's core controls division was more modest - revenue there rose 5.5 per cent and profit less than 3 per cent to £94.8m. That followed a slowdown in China's power market, and in India, too, where last year's election and prior heavy spending almost bought new investment to a standstill.
Broker Numis Securities expects adjusted pre-tax profit of £148.8m in 2013, giving adjusted EPS of 122.8p (from £131.6m and 109.3p in 2012).
ROTORK (ROR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 2,834p | MARKET VALUE: | £2.46bn | |
| TOUCH: | 2,831-2,836p | 12-MONTH HIGH: | 2,935p | LOW: 1,837p |
| DIVIDEND YIELD: | 1.5%* | PE RATIO: | 27 | |
| NET ASSET VALUE | 310p** | NET CASH: | £59.9m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 320 | 75.8 | 62.0 | 26.0 |
| 2009 | 354 | 90.9 | 74.2 | 28.4 |
| 2010 | 381 | 97.9 | 80.5 | 32.5 |
| 2011 | 448 | 113 | 93.0 | 37.3 |
| 2012 | 512 | 124 | 103 | 43.0 |
| % change | +14 | +10 | +11 | +15 |
Ex-div: 10 Apr Payment: 21 May *Excludes special dividends: 11.5p in 2011, 2010, 2009 and 2008 **Includes intangible assets of £121.5m, or 140p a share | ||||
