Shares in Renold (RNO) were marked up on the release of the group's half-year results, which may seem odd when you look at the past comparatives. But the supplier of industrial chains and power transmission products is undertaking a range of measures designed to lower its break-even point, and the numbers suggest that stability could be returning. Underlying revenues of £88m may have been down on the £92m generated in the first half of last year, but showed improvement over the second half (£87m), while adjusted operating profits were broadly flat.
More encouraging is the order outlook for the chain division, due in part to the January acquisition of the tooth chain division of Aventics. The business, which is located in Gronau, Lower Saxony, provides niche industrial applications typically seen in bottling plants and other manufacturing facilities. The integration process has progressed smoothly, with improvements noticeable both in terms of sales and cost synergies.
Renold remains one of the world's biggest producers of transmission, conveyor and leaf chains, yet its share of the global market is relatively small, reflecting industry-wide fragmentation. This presents opportunities to expand through acquisition, which now forms part of the group's re-jigged corporate strategy, as highlighted by the Aventics deal.
Arden Partners expects adjusted profits of £13.2m for the year ending March 2017, leading to EPS of 4.8p, rising to £15.9m and 5.8p in 2018 (from £12.7m and 4.7p in FY2016).
| RENOLD (RNO) | ||||
|---|---|---|---|---|
| ORD PRICE: | 39.3p | MARKET VALUE: | £88.5m | |
| TOUCH: | 38.5p-40p | 12-MONTH HIGH: | 60p | LOW: 29p |
| DIVIDEND YIELD: | nil | PE RATIO: | 23 | |
| NET ASSET VALUE: | * | NET DEBT: | £26.2m | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 84.5 | 4.6 | 1.6 | nil |
| 2016 | 88.3 | 2.7 | 0.9 | nil |
| % change | +4 | -41 | -44 | - |
Ex-div: - Payment: - *Negative shareholder funds, including intangible assets of £35m, or 16p a share | ||||
