Trading Statement

RNS Number : 1355Z

Ricardo PLC

16 July 2008

 



16 July 2008 

Ricardo plc

Trading Update

Ricardo plc ('Ricardo' or 'The Group') a market leading engineering, management and automotive consultancy, employing over 1700 people worldwide, is today providing a trading update for the 12 month period ended 30 June 2008 ahead of the announcement of its Preliminary Results on Wednesday 24 September 2008.

Following our Interim Management Statement issued in May 2008, we are pleased to report that the Group's performance has continued to progress well.

There continues to be very strong demand for engineering of engines, hybrids and transmission solutions to meet requirements for fuel economy combined with CO2  emission reductions. This, together with continued geographic industry development, particularly in Asia, has led to a strong order book.

Within the Technical Consulting division, the UK has continued to deliver to clients across the world, receiving additional business from the German and US operations, together with business secured from its major markets of the UK, Europe, Russia and Asia. The engines business has seen particularly strong demand for both gasoline and diesel programmes for motorcycle, passenger car, commercial, construction and agricultural vehicles. The business is delivering sizeable state of the art passenger car diesel programmes for Japanese and European clients to meet the most stringent US and European legislation. We are also delivering gasoline engine programmes for European, Chinese, Malaysian and Japanese clients and heavy duty engine programmes for Russian, Indian and European clients.

To date, the US business has had an invigorating year as previously announced leadership changes have immediately generated results. The business is operating at a new pace and has generated increased profits from a more diverse customer base. This has been achieved even with the absorption of restructuring costs and increased marketing and recruitment efforts.

Our Technical Consulting business in Germany continues its development with an increasing rate of recruitment, new business wins and further repeat business. As in the prior year, investment in management, marketing and brand building is securing more work from premium German clients than it is able to deliver locally, despite additional increased investments in facilities. The German division is passing the additional work back to the UK, which is benefitting from the additional contribution. The combination of a German front end and deep technical experience in the UK is providing a compelling offering.

The exhaust manufacturing business in Germany is experiencing a difficult period as a major core series production programme concluded and prototyping projects were unable to fully fill the capacity gap. Although follow on series production orders have recently been secured, the business is entering the design stage prior to achieving full production levels towards the end of 2008/09. This will mean that the business will continue to run at lighter utilisation levels for a significant part of 2008/09.  

Overall, the Technical Consulting business has demonstrated solid revenue and profit growth compared to the same period last year.

Demand for our Strategic Consulting services continues to increase, which has led to increasing revenue and profit. We have developed our business in Asia, recruiting an experienced leader and putting in place a team in our offices in Shanghai. In other parts of Asia, we have further increased our client base, particularly in Korea and India. In addition, in the US and European markets we have made steady progress in broadening our client portfolio adding some of the industry's leading firms in both markets to our on going client base. As a result, in Germany we have opened a second office located in Munich and increased the size of our US consulting team.

We are pleased to report continued focus on working capital management has further improved our net debt position to near zero.

We do not envisage any material tax benefits to our annual tax charge, unlike last year where some £5.4m of retrospective R&D tax credits resulted in an overall tax credit and directly boosted earnings per share performance.  

Our strategy to diversify is again demonstrating resilience and delivering overall growth. The overall group performance remains strong. We expect the outcome for the year ended 30 June 2008 to show good progress over last year and in spite of the difficult world economic and industrial environment, we remain confident that demand for the group's expertise will continue to grow.

Further enquiries:

Ricardo plc
Dave Shemmans, Chief Executive		Tel: [phone]
Paula Bell, Group Finance Director
Website: www.ricardo.com
Gavin Anderson & Company
Fergus Wylie Robert Speed Michael Turner		Tel: [phone]

 

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