Pre-Close & Rolls Royce Claim
Ricardo PLC
12 July 2004
12 July 2004
Ricardo plc
Pre-Close Trading Update
Conclusion of Rolls Royce Claim
Pre-Close Trading Update
Today the Board of Ricardo plc is today providing a trading update before the
Company enters the close period in respect of the year ended 30 June 2004.
Ricardo will announce its Preliminary Results on Monday 20 September 2004.
Since the announcement of our interim results in February, we are pleased to
report that we are continuing to see a more encouraging outlook for the business
following the challenges of 2003/4 when Ricardo saw the toughest trading
conditions for 10 years.
Although the automotive market remains challenging, the order book has continued
to strengthen and increased from £45m to £53m in the second half, up 18%. The
order book also reflects a focus on better margin contracts with an improved and
broader customer mix.
Our UK businesses are responding well to the action taken to reduce our cost
base by some £10m per annum, the full benefits of which will come through in the
new financial year.
In February, we reported that January 2004 was the best order intake month for
our engines business in Shoreham since March 2002. We continued to see higher
activity levels during the period and the order book has continued to grow, with
a broader mix of customers and improved margins. This is a solid performance in
difficult markets. Our vehicle engineering business had a tough six months in
line with our expectations, but has also seen some signs of improving prospects
for the new financial year.
Our transmissions business, however, saw continued difficult trading conditions
and did not perform as well as we had anticipated earlier in the year. Whilst
this will impact on the results for the full year, we expect to see some
improvement in this business when lower margin contracts are completed as we
move into the new financial year.
In February, we reported that our strategic consulting business had made a loss
in the first half and was facing difficult market conditions. These continued
into the second half but in the last quarter we won some important new business
and our order book is now much improved with higher activity levels.
Our international operations have performed well and we are seeing increased
interest from other markets particularly Asia. The German business which we
acquired in 2003 is profitable and earnings enhancing. In the US we continue to
make profits in a tough market.
In conclusion, whilst our international operations remained profitable and all
our other UK businesses traded in line with our expectations, the results from
our transmissions business were disappointing. This had an impact on our trading
performance overall for the full year, although we moved from a loss in the
first half into improving profits in the second half. Accordingly, although we
anticipate reporting a profit for the full year, this will fall short of current
market expectations for profit before tax, exceptionals and goodwill.
The balance sheet remains strong and we anticipate reporting borrowings in the
order of £11m, which is better than expected. Given our current view of the
outlook for next year and in the absence of unforeseen circumstances, it is the
Board's intention to maintain the dividend for the full year.
Whilst recent performance has been adversely affected by difficult market
conditions, given the improving strength of our order book we are increasingly
confident that the future outlook for the Group remains positive for the new
financial year.
With its strengthening global coverage, Ricardo remains well placed to exploit
opportunities as markets recover and is on track to see an improved performance
in the new financial year.
Conclusion of Rolls Royce Claim
The claim made by Rolls Royce Power Engineering PLC and Allen Power Engineering
Limited against Ricardo Consulting Engineers Limited has been resolved.
Enquiries:
Ricardo plc Tel: 01273 455611
Rodney Westhead, Chief Executive
Andrew Goodburn, Finance Director
www.Ricardo.com
Gavin Anderson & Company Tel: 0207 554 1400
Laura Hickman/Charlotte Stone
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