29th Oct 2014 10:01
LONDON (Alliance News) - Shares in Ricardo PLC were up on Wednesday after it said it has seen a positive start to its new financial year, with first quarter order intake rising and its order book at the end of the quarter ahead of the same period a year earlier, giving it confidence in its outlook for the year.
The environmental and engineering consultancy said order intake in the first quarter to the end of September was GBP8.5 million, with a particularly strong start to the new financial year in Asia.
The group's order book at the end of September was GBP142 million, GBP21 ahead of the same period a year earlier, though unchanged on the end of its last financial year in June.
The group said its Technical Consulting arm won a large commercial vehicle project contract for a new Asian customer during the period, along with power generation and passenger car work in the UK and more high performance vehicle and motorsport orders for its Performance Products unit.
The group said its pipeline is currently strong, with multi-year development programmes for customers in the UK, Europe, Asia and North America.
Ricardo-AEA, its energy and environmental arm acquired in November 2012, has been bidding on a number of new international opportunities recently, it said.
Ricardo also noted it completed the acquisition of Vepro Ltd in the period.
"The strong order intake in the final quarter of the last financial year has continued in the summer months, and I am particularly pleased with the continued growth in new business from Asia," said Ricardo Chief Executive Officer Dave Shemmans.
"With the good start to the year and the encouraging pipeline, we remain confident of continued progress in the remainder of our current financial year," he added.
Investec reiterated its Buy recommendation on Ricardo on the back of the trading statement, saying the company has had a "very good start" to its new financial year.
In addition, the broker said the update "encouragingly" showed that the company managed to maintain the strong order intake posted in the final quarter of last year during the most "seasonally challenging quarter in the year".
It added its pipeline of new opportunities is also "encouraging", given the potential for multi-year programmes in key sectors in its main markets.
Investec also added forecasts for the full year 2017 to its Ricardo coverage for the first time to include the first full year of the McLaren Automotive contract. The multi-year engine supply deal was signed in December last year and will see the company earn revenue of around GBP40 million per year from the 2016-17 financial year onwards, or GBP240 million over the six years of the contract.
Ricardo shares were up 1.5% to 642.00 pence on Wednesday.
By Sam Unsted; [email protected]; @SamUAtAlliance
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