REG - Renold PLC - AGM Trading Update

RenoldAnnouncement

05/09/2023 07:00

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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 £85.1m (FY23 equivalent  £73.0m), 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 £5.4m.

 

Order intake for the Period was £74.2m, a decrease of 2.7% (FY23 equivalent
£76.3m), or a 1.0% decrease at constant exchange rates. YUK contributed
£4.9m to order intake in the Period. The order book as at 31 July 2023 of
£86.0m 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 £23.3m (representing 0.6x EBITDA(1)), a
reduction of £6.5m (21.8%) from £29.8m 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 £1.7m of deferred consideration relating to the YUK
acquisition and the purchase consideration of £3.1m (AU$6.0m) for Davidson.
Additionally, the Group will bring forward the payment of the H2 pension
contribution of approximately £2.6m, 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 Broker   Joint 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 (http://www.renold.com)

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