Strategic Review and Period End Trading Update
Renold plc
("Renold", "the Company" or "the Group")
Strategic Review and Period End Trading Update
Renold, a leading international supplier of industrial chains and related power transmission products, is today issuing an update on the Group's strategic review and a period end trading update covering the six months ending 30 September 2013 (the 'period').
Strategic Review Update
Subsequent to the previous announcement released on 27 August 2013, the Company has concluded the consultation process with its employees and their representatives at the Bredbury Chain facility in the UK. A project will now commence to close the majority of the facility with a small configured chain cell to be retained to service local market needs.
The project is expected to complete in the first quarter of the next financial year and further details will be included in the Group's Interim Results statement on 19 November 2013.
Period End Trading Update
Underlying1 Group revenue fell by 2.3% in the period compared to the first half of the prior year. In the Chain Division underlying external revenue was 1.0% down on the same period last year whereas Torque Transmission was down 6.4%. For the Group as a whole, underlying external revenue was 1.6% ahead of the second half of the prior year.
Underlying external order intake in Chain was 0.5% above the first half of the prior year and 2.4% below in Torque Transmission, giving a net decrease for the Group of 0.2%.
Good progress has been made in improving contribution2 margins which fully offset the volume reduction in the period. In addition, overhead reductions which benefitted the second half of the prior year by £2m provided a similar level of savings in the first half of the current year. This was partially offset by £0.5m of additional depreciation.
The first half underlying adjusted3 operating profit is therefore expected to be substantially better than the first half of the prior year. The full year results will be sensitive to the successful delivery of the Bredbury closure and associated activities. However, it is expected that the second half will see a similar result to the first half and the Board therefore expects the full year result to be substantially ahead of current market expectations.
There have been no other significant changes in the position of the Company over the period since the publication of the full year results for the year ended 31 March 2013.
Robert Purcell, Chief Executive of Renold plc, said:
"The closure of our Bredbury facility is a necessary step in re-engineering our business. We will continue to work actively to support our colleagues through this difficult time.
The closure will significantly lower our breakeven point and will add to the cost reductions being delivered in other parts of the Group. We retain our focus on continuous improvement in our key business processes to deliver the first, self-help phase, of our turnaround plan."
22nd October 2013
1 Throughout this document underlying data excludes the impact of foreign exchange movements
2 Contribution margin is calculated as the profit margin% after the deduction of direct variable costs
3 Adjusted for exceptional items and IAS 19 pension charges including finance charges and administrative expenses included in operating costs and, where relevant, any tax thereon.
ENQUIRIES:
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Renold plc |
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Robert Purcell, Chief Executive |
0161 498 4517 |
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Brian Tenner, Finance Director |
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Arden Partners |
020 7614 5917 |
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Chris Hardie |
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College Hill |
020 7457 2020 |
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Mark Garraway |
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Helen Tarbet |
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NOTES FOR EDITORS
Renold is a global leader in the manufacture of industrial chains and also manufactures a range of torque transmission products which are sold throughout the world to a broad range of original equipment manufacturers and distributors. The Company has a well-deserved reputation for quality that is recognised worldwide. Its products are used in a wide variety of industries including manufacturing, transportation, energy, steel and mining.
Further information about Renold can be found on the website at: www.renold.com
This information is provided by RNS
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