Renold PLC AGM Trading Update (3261L)

TIDMRNO

RNS Number : 3261L

Renold PLC

05 September 2023

5 September 2023

Renold plc

("Renold", the "Company" or the "Group")

AGM Trading Update

Renold, a leading international supplier of industrial chains and related power transmission products, is pleased to provide a trading update covering the four months ended 31 July 2023 (the "Period") ahead of the Company's annual general meeting being held at 11.00 a.m. today.

The Board is pleased to report that the Group's financial performance in the first four months of the new financial year has been strong. Group revenue for the Period was GBP85.1m (FY23 equivalent GBP73.0m), a year-on-year increase of 16.6% at reported rates and 18.7% at constant exchange rates. Within this, YUK S.A. ("YUK"), acquired in August 2022, contributed GBP5.4m.

Order intake for the Period was GBP74.2m, a decrease of 2.7% (FY23 equivalent GBP76.3m), or a 1.0% decrease at constant exchange rates. YUK contributed GBP4.9m to order intake in the Period. The order book as at 31 July 2023 of GBP86.0m remains higher than historic levels. However there has been a normalisation of order intake following an improvement in global supply chains, with improvements to delivery times, allowing customers to reduce forward order placement as certainty of deliveries increase, leading to a reduction and shortening of the order book. The order book at 31 July 2023 represents a decrease of 13.6% over the record high position at the end of the previous financial year.

On the 1 September 2023, the Group acquired the trading assets of Davidson Chain PTY ("Davidson"), based in Melbourne, Australia, enlarging our already strong Australian Chain business by 26%. The Davidson acquisition demonstrates further strategic momentum, supplementing organic growth through high quality bolt-on acquisitions which can expand our geographic presence, grow our product offering and strengthen our market position in key end markets.

Net debt as at 31 July 2023 was GBP23.3m (representing 0.6x EBITDA(1) ), a reduction of GBP6.5m (21.8%) from GBP29.8m as at 31 March 2023, reflecting the strong underlying cash generation of the business during the Period. Net debt at the half year (period ending 30 September 2023) is expected to increase, following the payment of GBP1.7m of deferred consideration relating to the YUK acquisition and the purchase consideration of GBP3.1m (AU$6.0m) for Davidson. Additionally, the Group will bring forward the payment of the H2 pension contribution of approximately GBP2.6m, which enables efficiency gains in the investment portfolio .

Global markets continue to be uncertain, with ongoing labour cost inflation and material costs remaining high when compared to historic levels. Whilst there is a normalisation of demand in some of the Group's end markets, the Group retains strong order books which remain high by historical standards, despite a shortening of lead times, reducing the overall quantum.

As a result of the continued positive trading momentum, and an increase in activity from the recently announced Davidson acquisition, the Board now anticipates achieving results for the year ending 31 March 2024, higher than previously expected.

(1) Calculated as Net debt as at 31 July 2023/ Ebitda for the preceding 12 months taken from the Group management accounts.

 
 ENQUIRIES: 
 Renold plc                            IFC Advisory Limited 
 Robert Purcell, Chief Executive       Tim Metcalfe 
 Jim Haughey, Group Finance Director   Graham Herring 
 
 0161 498 4500                         020 3934 6630 
 
 Nominated Adviser and Joint           Joint Broker 
  Broker 
 Peel Hunt LLP                         FinnCap Limited 
 Mike Bell                             Ed Frisby / Tim Harper (Corporate 
                                        Finance) 
 Ed Allsopp                            Andrew Burdis / Harriet Ward 
                                        (ECM) 
 
 020 7418 8900                         020 7220 0500 
 

NOTES FOR EDITORS

Renold is a global leader in the manufacture of industrial chains and also manufactures a range of torque transmission products which are sold throughout the world to a broad range of original equipment manufacturers and distributors. The Company has a well-deserved reputation for quality that is recognised worldwide. Its products are used in a wide variety of industries including manufacturing, transportation, energy, steel and mining.

Further information about Renold can be found on the website at: www.renold.com

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September 05, 2023 02:00 ET (06:00 GMT)