Rotork (ROR) is undoubtedly a British engineering success story. The company has been a leading manufacturer of actuators (valve-control devices) for decades and has established sales channels in 90 countries around the world. But this year, for exporters, it has not paid to be British.
The strength of the sterling knocked £23.5m off revenue and shaved £6.8m off adjusted operating profit, leaving it marginally down at £69.1m. Yet this masked good underlying growth across the business. Like-for-like sales, after adjusting for currency effects, rose 4.4 per cent, while Rotork's order book climbed 7.4 per cent since December. Three acquisitions in the second half of 2013 and the purchase of a Korean maker of valve positioners in March 2014 contributed an additional £10.7m of revenue during the period. And post-period-end, Rotork picked up Xylem Flow Control for £18m.
And while foreign exchange swings dented the company's reported operating margin at 24.8 per cent, it's still impressive considering the low-cost nature of actuators and the high volume of orders. "The barriers to entry in this business are quite high," explains chief executive Peter France, because the equipment is often "mission-critical" and there are loads of safety requirements.
Broker Numis Securities expects EPS of 131p this year, rising to 138p next year (from 125p in 2013).
ROTORK (ROR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 2,790p | MARKET VALUE: | £2.4bn | |
| TOUCH: | 2,790-2,796p | 12-MONTH HIGH: | 2,982p | LOW: 2,331p |
| DIVIDEND YIELD: | 1.8% | PE RATIO: | 25 | |
| NET ASSET VALUE: | 394p* | NET CASH: | £14.9m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 276 | 63.6 | 52.8 | 18.05 |
| 2014 | 279 | 61.5 | 51.5 | 19.2 |
| % change | +1 | -3 | -2 | +6 |
Ex-div: 27 Aug Payment: 26 Sep *Includes intangible assets of £204m, or 235p a share | ||||
