Rotork’s (ROR) numbers for 2018 may look impressive, but its trading environment certainly isn't as promising as it was 12 months ago. Pre-tax profits were up by more than a half to £121m on an organic, constant currency basis (OCC), while the adjusted operating margin expanded 60 basis points to 21 per cent. Despite solid operational performance, economic uncertainty is set to constrain sales growth in 2019, with a dip in first half OCC revenues now anticipated (albeit against tough comparators).
The group makes most of its sales in the oil and gas sector. So, the commercial backdrop brightened at the beginning of 2018 due to rising oil prices, while favourable purchasing managers' indexes and GDP indicators also lent support to the group's water and industrial markets. But a faltering macro outlook meant that growth in OCC order intake, though healthy enough at 5.4 per cent, was down on the prior year..
The group has been selling non-core businesses to increase efficiency and reported an 11.3 per cent increase in adjusted operating profit per employee, to £38,000. Meanwhile, cash generation increased by around 10 per cent at the operating level, and working capital to sales improved by 160 basis points.
Analysts at UBS are forecasting adjusted operating profit of £154m, giving EPS of 13.2p in 2019, up from £146m and 12.5p in 2018.
| ROTORK (ROR) | ||||
| ORD PRICE: | 284.6p | MARKET VALUE: | £ 2.48bn | |
| TOUCH: | 284.5-284.9p | 12-MONTH HIGH: | 363p | LOW: 233p |
| DIVIDEND YIELD: | 2.1% | PE RATIO: | 27 | |
| NET ASSET VALUE: | 59p* | NET CASH: | £43.6m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2014 | 595 | 141 | 11.9 | 5.00 |
| 2015 | 546 | 102 | 8.60 | 5.10 |
| 2016 | 590 | 91.0 | 7.70 | 5.10 |
| 2017 | 642 | 81.0 | 6.40 | 5.40 |
| 2018 | 696 | 121 | 10.5 | 5.90 |
| % change | +8 | +49 | +64 | +9 |
| Ex-div: | 11 Apr | |||
| Payment: | 22 May | |||
| *Includes intangible assets of £292m, or 33p a share | ||||
