Ricardo (RCDO) encountered severe difficulties in the European and US automotive markets over its full year, as the engineering group saw its overall order intake slide to £386m, down from £413m last year. Its current exposure to the UK automotive market is low, according to chief executive Dave Shemmans, who suggested that we may have entered the bottom of the automotive cycle. Ricardo had no orders from Jaguar Land Rover this year. “From that perspective, it can’t get any worse,” he said.
Ricardo fared better in its performance products and energy & environment divisions. It made an acquisition in the latter segment in Australia in July, sealing another deal down under in its rail outfit in May. These agreements pushed Ricardo’s net debt up significantly. But, far from seeking to immediately reduce this figure, chief financial officer Ian Gibson said that the business had an eye on more acquisitions, as it considers building out its rail and energy & environment presence, along with its automotive capability, with “software-type businesses within the automotive space”, he said. “We don’t have any rail presence in the US, and we don’t have any environmental presence in the US,” he added.
Peel Hunt forecasts full-year 2020 pre-tax profits of £42.3m and earnings per share of 61.3p, rising to £44.5m and 64.6p in 2021.
| RICARDO (RCDO) | ||||
| ORD PRICE: | 668p | MARKET VALUE: | £357m | |
| TOUCH: | 660-668p | 12-MONTH HIGH: | 890p | LOW: 572p |
| DIVIDEND YIELD: | 3.2% | PE RATIO: | 18 | |
| NET ASSET VALUE: | 321p* | NET DEBT: | 28% | |
| Year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2015 | 258 | 22.9 | 35.6 | 16.6 |
| 2016 | 332 | 33.0 | 48.6 | 18.1 |
| 2017 | 352 | 32.2 | 46.8 | 19.3 |
| 2018 | 379 | 27 | 33.0 | 20.5 |
| 2019 | 384 | 26.5 | 37.1 | 21.3 |
| % change | +2 | -2 | +12 | +4 |
| Ex-div: | 7 Nov | |||
| Payment: | 21 Nov | |||
| *Includes intangible assets of £125m, or 234p a share | ||||
