Rotork’s (ROR) warning that an improved trading backdrop is unlikely to feed into a better adjusted operating profit margin in 2018 didn’t sit too well with investors. The engineer guided for mid to high single-digit organic revenue growth for the year ahead, before adding that currency headwinds, together with increased investment in new products, service infrastructure and IT infrastructure, are poised to offset those gains.
Chairman Martin Lamb is confident that investors will eventually begin to appreciate the longer-term implications of Rotork’s determination to reinvest incremental profit back into the business. These measures, he says, are fundamental if the engineer is to fulfil its earlier pledge to return to its former growth and margin trajectory within the next five years.
An 8 per cent rise in organic constant currency order intake to £667m suggests that efforts to develop more efficient engineering solutions for cash-strapped customers are having the desired effect. Order activity is finally picking up in upstream energy markets, following years of deferrals, while encouraging progress was also reported across water and industrial processes markets.
Numis expects adjusted pre-tax 2018 profit of £132m, giving EPS of 11.5p, up from £125m and 10.6p last year.
| ROTORK (ROR) | ||||
| ORD PRICE: | 264.2p | MARKET VALUE: | £2.35bn | |
| TOUCH: | 264-264.4p | 12-MONTH HIGH: | 307p | LOW: 221p |
| DIVIDEND YIELD: | 2.0% | PE RATIO: | 42 | |
| NET ASSET VALUE: | 53p* | NET DEBT: | 3% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2013 | 578 | 138 | 115 | 48.1 |
| 2014† | 595 | 141 | 11.9 | 5.0 |
| 2015 | 546 | 102 | 8.6 | 5.1 |
| 2016 | 590 | 91 | 7.7 | 5.1 |
| 2017 | 642 | 81 | 6.4 | 5.4 |
| % change | +9 | -12 | -17 | +6 |
| Ex-div: | 5 Apr | |||
| Payment: | 23 May | |||
*Includes intangible assets of £309m, or 36p a share †EPS and DPS restated to reflect subdivision of 5p ordinary shares into 0.5p ordinary shares | ||||
