9th Mar 2018 10:31
Renold shares were down 16% at
The supplier of industrial chains said its adjusted operating profit will come in below market expectations and "slightly" down from the results it reported the year before. Renold recorded adjusted operating profit of
The group said that the Torque Transmission division remains on track to perform in line with expectations, while the Chain division has been impacted by several factors.
Renold said that results reported from its North American business will be hit by currency translation to sterling from a weaker dollar.
Renold said operating margins in its Chain division were impacted by increased raw material prices. Although, Renold said its "making a good progress" in passing additional costs on to customers, the realisation progress has been slower than anticipated.
Raw material prices have continued to increase in certain territories, the company said, and, along with the weakening of the dollar exchange rate, are necessitating further sales price increases. Therefore, it expects results reported from its North American business to be hit by currency translation to sterling.
Renold also forecast full-year revenue to grow to 5.0%. In the prior year Renold's revenue was
Renold Chief Executive Officer Robert Purcell said: "The increase in raw material prices has been significant, both in scale and speed, and has challenged our ability to pass these costs through to customers at the same pace. The adverse impact on profit of timing differences between increasing costs and the off-setting sales price increases being realised has continued through the second half of the year.
"This is masking the positive effects of our strategic actions which are delivering organic growth across most Chain and Torque Transmission business units. These actions have also improved the resilience of the group when faced with challenging conditions, as demonstrated by a third year of consistent profit delivery. We continue to remain focused on executing the group's strategy in order to deliver sustainable improvements in performance."
Related Shares:
Renold