Shares in Rotork (ROR) were marked down initially on news that chief executive Peter France had decided to call it quits following a Zen-like “period of reflection”. Mr France’s departure was precipitated by the need to bolster growth rates and margins in the face of a likely “lower growth macro environment”. A new hand on the tiller often helps, but there are already signs that the refusal to cut back investments in those areas that underpin future growth, such as product innovation, are feeding through to the order book, which was up 16.5 per cent from the year-end, at constant currencies, to £213m.
Flat constant-currency revenue and a 3.7 per cent decline in adjusted operating profit attest to tight market conditions. And Rotork, a manufacturer of valve actuators and gearboxes, has been struggling with inflationary pressures, evidenced by a 70 basis-point contraction in the underlying margin to 18.2 per cent. However, management is expecting a £2m benefit from current year initiatives, in addition to savings already put in place.
Peel Hunt gives adjusted pre-tax profit of £127m and EPS of 10.7p for the year-end, against £118m and 10p in 2016.
| ROTORK (ROR) | ||||
| ORD PRICE: | 242p | MARKET VALUE: | £ 2.11bn | |
| TOUCH: | 242-244p | 12-MONTH HIGH: | 269p | LOW: 191p |
| DIVIDEND YIELD: | 2.1% | PE RATIO: | 28 | |
| NET ASSET VALUE: | 53p* | NET DEBT: | 10% | |
| Half-year to | Turnover | Pre-tax | Earnings per | Dividend |
| 30 Jun | (£m) | profit (£m) | share (p) | per share (p) |
| 2016 | 264 | 38.3 | 3.3 | 1.95 |
| 2017 | 300 | 48.8 | 4.3 | 2.05 |
| % change | +14 | +27 | +30 | +5 |
| Ex-div: | 24 Aug | |||
| Payment: | 22 Sep | |||
| *Includes intangible assets of £347m, or 40p a share | ||||
