25th Jul 2018 09:55
LONDON (Alliance News) - Shares in Ricardo PLC fell Wednesday as the company warned profit for its recently ended financial year will be towards the lower end of analyst consensus.
Ricardo shares were trading at a price of 826 pence each early Wednesday, down 12%.
In the 12 months to June Ricardo, an engineer as well as an environmental and strategic consultant, said its order intake was "good", at GBP410 million compared to GBP366 million a year earlier.
Ricardo's Technical Consulting business did well in the second half of its year, while in the UK its Automotive saw declining orders due to market uncertainty.
Hybrid vehicles are making up a higher proportion of total group order intake than they were a year ago, with the figure now standing at 21% of orders compared to 17% a year earlier.
Overall, revenue is expected by Ricardo to be above GBP380 million compared to GBP352 million in its prior financial year.
However, Ricardo nevertheless expects underlying pretax profit to be "towards the lower end of the range of analysts forecasts". In its last financial year, the figure rose to GBP38.3 million from GBP37.7 million.
The company did not provide the range of consensus, and said the lower guidance was due to "reduced" performance in its Europe, Middle East, and Asia Automotive business due to lower UK orders and some "difficult" projects.
Operationally, Ricardo has made progress in reducing costs and boosting efficiency in its international test operations, and it has cut debt to GBP26 million as at the end of June from GBP38 million a year prior, beating expectations.
Ricardo also announced a refinancing deal on Wednesday. It has upped its previous bank facilities to GBP150 million from GBP75 million to support acquisitions and investments.
Looking to its recently begun financial year, Ricardo said Brexit is continuing to provide uncertainty. As long as conditions in the market remain as they are, it said, then it expects revenue growth of between 3% and 5% for the year.
Chief Executive Dave Shemmans said: "It has been a busy year across the group with mixed performance in our different market sectors and regions which underlines the importance of our diversification strategy.
"I am very pleased with the continued strong performance in Asia across both our Automotive and Rail businesses which, together with a strong pipeline, provide great opportunity for the future."
Shemmans continued: "The EMEA Automotive business has had a challenging year with a reduced level of work in the UK and some challenging projects to deliver and we have taken action to address this. Performance Products has had another very good year and has some significant opportunities in the pipeline."
"Overall, therefore, despite some uncertainty in the UK in the short term, we enter the new financial year in good shape and I remain confident about the future."
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