Renold plc
Interim results for the half year ended 30 September 2023
(“Renold”, the “Company” or, together with its subsidiaries, the “Group”)
Strategic and operational progress driving record earnings growth
Renold (AIM: RNO), a leading international supplier of industrial chains and related power transmission products, announces its interim results for the six month period ended 30 September 2023.
| Financial summary | Half year ended | Change % (Constant currency)1 | ||
| £m | 30 September 2023 | 30 September 2022 | Change % | |
| Revenue | 125.3 | 116.3 | +7.7% | +10.7% |
| Adjusted operating profit2 | 15.0 | 9.6 | +56.3% | +59.4% |
| Return on sales2 | 12.0% | 8.3% | +370bps | +360bps |
| Adjusted profit before tax2 | 11.3 | 7.3 | +54.8% | |
| Net debt3 | 28.3 | 34.0 | ||
| Adjusted earnings per share2 | 3.8p | 2.7p | +40.7% | |
| Additional statutory measures | ||||
| Operating profit | 16.2 | 8.8 | +84.1% | |
| Profit before tax | 12.5 | 6.5 | +92.3% | |
| Basic earnings per share | 4.4p | 2.3p | +91.3% | |
Financial highlights
| · | Revenue up 7.7% (10.7% at constant exchange rates) to £125.3m (2022: £116.3m) driven by strong improvement in Torque Transmission (“TT”) activity levels and continued growth in Chain. |
| · | Adjusted operating profit up 56.3% (59.4% at constant exchange rates) to £15.0m (2022: £9.6m). |
| · | Return on sales increased by 370bps, (360bps at constant exchange rates) to 12.0% (2022: 8.3%). |
| · | Net debt as at 30 September 2023 of £28.3m (31 March 2023: £29.8m), despite acquisition of Davidson Chain Pty (“Davidson”) for £3.1m in the period and deferred payment of £1.7m for Industrias YUK S.A. (“YUK”). Net debt represented 0.7x rolling 12 months adjusted EBITDA. |
| · | Adjusted EPS up 40.7% to 3.8p (2022: 2.7p). |
| · | IAS 19 pension deficit reduced by 15.3% to £52.7m (31 March 2023: £62.2m). |
Business highlights
| · | Good progress on productivity improvements, cost reduction programmes and capital investment projects, accelerating the integration of Group-wide supply chain and increasing operational capabilities. |
| · | Strong first half sales performance, despite normalisation in order intake to £109.7m when compared to the prior H1 record order intake of £124.1m. |
| · | Order book at 30 September 2023 of £83.6m, compared to prior year’s record high (30 September 2022: £99.0m) as the duration of the order book shortened following normalisation of supply chains this year. |
| · | Acquisition of Davidson for AU$6.0m, increasing the Group’s access to the Australian conveyor and adapted transmission chain markets. The integration process is progressing well and the business is performing in line with expectations. |
| · | £2.2m exceptional profit from the assignment of a lease for a closed legacy site, resulting in a £0.7m per annum reduction in ongoing leased property costs. |
1 See below for reconciliation of actual rate, constant exchange rate and adjusted figures.
2 See Note 12 for definitions of adjusted measures and the differences to statutory measures.
3 See Note 8 for a reconciliation of net debt which excludes lease liabilities.
Robert Purcell, Chief Executive of Renold, said:
“I’m pleased to report continued progress which builds on the momentum the Group has enjoyed in recent periods, delivering a record half year result. Sales, margins, profits and cash generation have all progressed well. Global markets continue to be uncertain and we remain vigilant for changes in patterns of demand beyond the current order book shortening. We are delighted with the purchase of Davidson in Australia, which further builds our inorganic growth strategy and we remain well positioned to continue developing through acquisition. There remains uncertainty over the implication of global economic pressures in the medium term, however the Board is increasingly confident in delivering a result for the current year ahead of previous market expectations.”
Reconciliation of reported, constant exchange rate and adjusted results
| Revenue | Operating profit | Earnings per share | ||||
| H12023/24£m | H12022/23£m | H12023/24£m | H12022/23£m | H12023/24pence | H12022/23pence | |
| Statutory at actual exchange rates | 125.3 | 116.3 | 16.2 | 8.8 | 4.4 | 2.3 |
| Adjust for non-recurring items: | ||||||
| Assignment of lease of closed site | – | – | (2.2) | – | ||
| Acquisition and reorganisation costs | – | – | 0.5 | 0.6 | ||
| Amortisation of acquired intangible assets | – | – | 0.5 | 0.2 | ||
| Adjusted at actual exchange rates | 125.3 | 116.3 | 15.0 | 9.6 | 3.8 | 2.7 |
| Exchange impact | 3.4 | – | 0.3 | – | ||
| Adjusted at constant exchange rates | 128.7 | 116.3 | 15.3 | 9.6 | ||
Investor Presentation
The Company will conduct a live presentation and Q&A session for investors at 5:30 pm GMT today, 15 November 2023. The presentation is open to all existing and potential shareholders. Those wishing to attend should register via the following link and they will be provided with log in details:
https://us02web.zoom.us/webinar/register/WN_DwsvKoYLQumb8x1YZg-klw
There will be the opportunity for participants to ask questions at the end of the presentation. Questions can also be emailed to renold@investor-focus.co.uk ahead of the presentation.
ENQUIRIES:
| Renold plc | IFC Advisory Limited |
| Robert Purcell, Chief Executive | Tim Metcalfe |
| Jim Haughey, Group Finance Director | Graham Herring |
| renold@investor-focus.co.uk | |
| 0161 498 4500 | 020 3934 6630 |
| Nominated Adviser and Joint Broker | Joint Broker |
| Peel Hunt LLP | Cavendish Capital Markets Limited |
| Mike Bell | Ed Frisby (Corporate Finance) |
| Ed Allsopp | Andrew Burdis / Harriet Ward (ECM) |
| 020 7418 8900 | 020 7220 0500 |