14th Oct 2019 09:29
(Alliance News) - Renold PLC on Monday said it remains on track to deliver annual results in line with management's expectations, assuming no significant further deterioration in trading conditions.
The industrial chains and power transmission products supplier also said that its ongoing focus on operational efficiency was helping to offset a challenging market environment.
Renold shares were down 3.4% at 21.50 pence each in London on Monday morning.
The company said adjusted revenue and order intake fell 3.2% and 8.5%, respectively, in the six months to September 30, as economic conditions weakened during the second quarter following a stable first quarter.
The decline in first half revenue was mainly attributed to a deterioration in the industrial goods sector, impacting demand from distributors and original equipment manufacturers in the company's core European and US industrial chain markets.
Renold said a proactive cost action is underway to align the business with demand levels and offset weak markets. As part of its efficiency programme, the company sold its non-core South African Torque Transmission business unit to its management team in late September for nominal consideration.
"Recent order intake trends suggest that current market weakness will continue into the second half of the year. However, as previously indicated, the group expects the second half to benefit from an increasing contribution from the ongoing ramp-up in efficiency at the new Chinese factory, together with further cost reduction activities across the group resulting in a more equal weighting between the first and second halves of the year," the company said.
Renold Chief Executive Robert Purcell said: "Whilst market conditions remain challenging in the near term, we are encouraged by the positive impact of our ongoing strategic initiatives and this underpins our confidence in the long term opportunity for Renold."
The company is scheduled to release its interim results on November 13.
By Tapan Panchal; [email protected]
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