Rotork Boosts Payout Despite Full-Year Profit Fall On One-Off Costs

6th Mar 2018 09:14

LONDON (Alliance News) - Control systems firm Rotork PLC boosted its dividend Tuesday despite profit narrowing on exceptional costs associated with acquisitions and restructuring, as the FTSE 250-listed firm reported steadily improving markets.

In 2017, pretax profit narrowed 12% to GBP80.6 million and GBP91.1 million the year prior. Revenue advanced 8.8% to GBP642.2 million from GBP590.1 million the year before. On an organic constant currency basis, pretax profit fell 17% and revenue grew 2.3%.

"During the year, we saw a return to more favourable market conditions," Rotork Executive Chairman Martin Lamb said. "We saw modest recovery in certain markets and geographies in the first half of the year with a continued improvement during the second half."

Lamb assumed the role of executive chairman after former Chief Executive Officer Peter France resigned in July 2017. New CEO Kevin Hostetler will take up his post from next Monday having joined the board in mid February.

Profit performance was particularly hurt by GBP17.0 million in exceptional costs. These included GBP11.6 million in acquisition related costs and a further GBP5.4 million of restructuring costs. The prior year Rotork had no such costs.

Rotork completed its GBP16.3 million acquisition of Mastergear in June 2016.

"One off costs associated with the ongoing strategic reviews, and any initial rationalisation opportunities arising from those reviews, are likely to be at similar levels in H1 to H2 last year. We will update the market on likely costs for H2 in August alongside more detail around our plans for growth acceleration."

Order intake, however, increased to GBP66.5 million from GBP576.6 million the year prior, up 16% on a reported basis and 8.2% on an organic constant currency basis.

Rotork boosted its dividend to 3.35 pence per share from 3.15p the year prior, up 6.4%. For the full year, Rotork will pay 5.40p per share up 5.9% from the 5.1p paid the year before.

"Our revenue forecasts for 2018 currently reflect improving order momentum, pointing to mid to high single digit organic revenue growth year on year," Lamb added. "However reported results will be impacted by currency movements. Based on current rates we can expect a 4-5% headwind on both revenues and profits compared with last year."

"Adjusted operating profit margins are expected to be similar," Lamb continued, "with contributions from higher volumes offset by increased investments in new products, expansion of our service infrastructure, and accelerated investment in our systems and IT capabilities."

Margins shrank modestly to 20.3% from 20.4% the year prior.

Shares in Rotork were 4.1% lower at 274.40 pence on Tuesday.

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