31st May 2016 08:48
LONDON (Alliance News) - Industrial chains and power-transmission products company Renold PLC on Tuesday said reduced activity among its larger original equipment manufacturer accounts, as well as destocking by larger distribution partners, drove down revenue in its recently ended financial year, squeezing profit.
Renold said revenue for the year ended March 31 was GBP165.2 million, down from the GBP181.4 million it reported a year earlier, with the second and third quarters seeing the worst performance.
Underlying external revenue fell by 6.5% within its Chain division to GBP126.8 million, where all regions were affected by a combination of reduced activity among larger OEM accounts and destocking by European and US distribution partners.
Within the Torque Transmission division, underlying external revenue fell 16% to GBP38.4 million due to the division's exposure "to poor performing sectors", particularly in the Americas region for oil and gas, raw materials extraction and the steel industry. As such, there was weaker demand for hi-tech products within a number of commodity related markets, Renold said.
Because of the lower revenue, pretax profit dipped to GBP7.4 million from GBP7.7 million.
Renold said it would not pay a dividend for the year due to the investment plans it has set out and the subsequent need for capital to back those plans, in line with a year earlier.
Renold added that most of its end markets remain volatile, with much of this due to broad based macro uncertainty in a number of regions, and, as such, Renold said it was focusing on its Step 2020 Strategic Plan, which was "relevant and critical to the long term delivery of value to all of our stakeholders".
Over the year, Renold commenced the second and third phase of its strategic plan, namely organic growth and acquisitions. Renold said, as part of this, it was continuing to invest in modern manufacturing facilities, having invested GBP9.5 million during the year.
Renold noted integration of its newly acquired German Aventics Tooth Chain business continues to proceed smoothly with some synergies being delivered in the fourth quarter.
"Looking ahead, we are hopeful that market headwinds will moderate around the end of the first half of the new financial year. All three phases of STEP 2020 are now in progress. We are confident that the steps we are taking to improve our business will generate significant shareholder value, particularly when market conditions improve," said Chief Executive Robert Purcell.
Shares in Renold were up 1.9% at 41.25 pence on Tuesday.
By Hannah Boland; [email protected]; @Hannaheboland
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