A sharp uptick in capital expenditure programmes within the energy sector is fuelling demand for Rotork’s (ROR) industrial flow equipment. Organic revenues rose 15 per cent at constant currencies as the engineer’s previously cautious customer base responded to the rallying oil price by confidently ramping up production.
The only dampener on this consensus-beating top-line performance – and a 25 per cent increase in adjusted operating profit – was a slight moderation in order intake and organic revenues over the course of the reported period. In Rotork’s defence, tougher second-quarter comparatives were flagged beforehand, as was the booking of several large, one-off orders in the first three months of the year.
That left only one major update: a progress report on the group’s self-help programme. Management refrained from providing clear restructuring targets at this early stage, but did provide some extra details as it enters the “execution phase”. Six key focus areas were identified, covering innovation funnel, operational footprint, supply chain, talent development, IT systems and routes to market, the last of which will see Rotork exit three non-core businesses whose overheads are dilutive to margins.
Deutsche Bank forecasts adjusted pre-tax profit of £142m and EPS of 12.34p for the year, against £125m and 10.57p in 2017.
| ROTORK (ROR) | ||||
| ORD PRICE: | 343p | MARKET VALUE: | £2.99bn | |
| TOUCH: | 342-343p | 12-MONTH HIGH: | 363p | LOW: 221p |
| DIVIDEND YIELD: | 1.6% | PE RATIO: | 50 | |
| NET ASSET VALUE: | 54p* | NET DEBT: | 1% | |
| Half-year to 30 June | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 300 | 48.8 | 4.3 | 2.05 |
| 2018 | 331 | 54.7 | 4.7 | 2.20 |
| % change | +10 | +12 | +9 | +7 |
| Ex-div: | 23 Aug | |||
| Payment: | 21 Sep | |||
| *Includes intangible assets of £300m, or 34p a share | ||||
