Interim Management Statement

RNS Number : 7360C

Ricardo PLC

19 November 2009

 

Ricardo plc

19 November 2009

Interim Management Statement 

Ricardo plc ('Ricardo' or 'the Company') - a market leading engineering and automotive consultancy, is today providing an Interim Management Statement in respect of the period 1 July to the date of this release. Ricardo will announce its interim results for the six month period ending 31st December 2009 on 26th February 2010.

Trading conditions in our core markets have not markedly improved since the year end. However there is now a sense of stabilisation in a number of our core markets and we have noted an increasing level of sales interest in certain regions.  Our clients' confidence is improving and the order pipeline is building but the timing of orders is still difficult to predict with month by month slippages not uncommon. We currently have a number of medium to large programmes under active discussion with customers in the Asian regions, reflecting a recovery starting in the East.

In the US, a very depleted opening order book has resulted in a poor start to the financial year. However, as anticipated defence orders have now been received together with additional government and technology work, leading to a positive trend and a pleasing level of order intake over the period. As expected, the traditional US passenger car based orders remain depressed. 

In Germany, there has been an increase in discussions with clients since the summer shutdown, which we anticipate should lead to increased orders in the new calendar year. There is comparably less activity in other regions of Europe with the exception of government, commercial vehicle and defence related business in the UK. However, the UK business has seen an encouraging pick-up in the level of active discussions from Asia.  

China and Russia continue to be active with recent order wins and medium to large size programmes under discussion. Japan, Korea and India continue to provide a lighter level of orders, as seen in the second half of the last financial year, but again there are an increasing number of discussions which suggests an improved level of activity from these regions in the new calendar year.

Our Strategic Consulting business continues to face the challenges of a volatile market and is focussing its service offerings on more strategic and cost down initiatives for our clients.

Order intake for the four months since beginning of July reflected the expected dip due to the summer months and as a result of the underlying global economic conditions was 22% lower compared to the same period in the prior year.

The order book at the end of October is holding its position and remains strong and closed at just over £100m which compares to £97m at the end of June 2009. The profile of the opening orderbook for the period was weighted to delivery for the second half of this financial year, and as anticipated the trading for the four month period to the end of October was significantly lower than the same period last year, which was before the impact of the global downturn as previously communicated.

The sale of our discontinued exhaust business is ongoing and a number of companies have expressed initial interest and following cost restructuring actions last year, the business has been trading near a break-even position during the period.

The balance sheet remains strong with no significant changes in the financial position since our full year results to 30th June 09 although as in previous years we do expect to see net debt increase at the end of the first half consistent with the trading profile.

We continue to believe that the underlying demand for our technology and services remains; driven by tightening emissions and CO2 legislation. As previously stated, we are pressing ahead with our strategy to increase customer and sector spread supported by investment in research, facilities and our people. We reaffirm that we expect trading in the first half of this financial year to be substantially lower than the same period last financial year. Due to the size and profile of our orderbook and signs of an anticipated market recovery we continue to gather momentum and expect that second half trading will return to more normal levels. 

Further enquiries:

Ricardo plc
Dave Shemmans, Chief Executive	Tel:	01273 455611
Paula Bell, Group Finance Director
Website: www.ricardo.com
Kreab Gavin Anderson	Tel:	0207 074 1800
Fergus Wylie
Robert Speed
Michael Turner

 

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