REG - Ricardo PLC - Trading Update

RicardoAnnouncement

30/01/2025 07:00

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RNS Number : 1929V  Ricardo PLC  30 January 2025

 

Trading update

30 January 2025

 

Ricardo plc ("Ricardo"), a global strategic environmental and engineering
consulting company, providing expertise at the intersection of transport,
energy, and climate agendas, today announces its scheduled trading update
ahead of the half-year results on 5 March 2025.

 

Ricardo executes strategic transformation for long-term value but delays in
orders impact in the short-term

 

Accelerating our transformation

Ricardo recently completed two transactions, both of which support the Group
in simplifying and focusing its portfolio on long-term sustainable growth. The
acquisition of E3 Advisory (E3A), a leading Australian infrastructure advisory
firm, offers Ricardo a compelling strategic opportunity that will add further
scope to our Energy and Environment business and operational scale in
Australia. At the same time, the timing of the disposal of Ricardo's Defense
business has optimised cash for the Group, while accelerating its transition
in line with its strategic priority of becoming a global leader in environment
and energy-transition solutions.

Ricardo Defense

Following the disposal of the Defense business noted above, Defense will be
reported as discontinued operations. After a peak year in FY23/24, lower
volumes of its anti-lock brake system/electronic stability control (ABS/ESC)
retrofit kits led to a decline in orders, revenue and operating profit
compared to the prior year. Good growth continued in field services support
and technical consulting.

Further progress in the first half within Ricardo's continuing operations

Order intake for Ricardo's continuing operations was up by 10% (11% at
constant currency) for the six months to 31 December 2024 reflecting good
progress in securing multi-year contracts. Order book was up 2% (3% at
constant currency) compared to 31 December 2023. Reported year to date revenue
increased by 1% (2% at constant currency).

 ·     Energy and Environment (EE) delivered strong order growth driven
 by multi-year contract wins within air quality and policy, but phasing of
 orders impacted H1 revenue and profit, due to global elections, the delay in
 spend ramping for UK water asset management plan (AMP) cycles and global macro
 uncertainties. We expect good profit growth in the second half, with the
 impact of delays in orders reducing as we go into the next financial year.

 ·    Rail saw growth in H1, reflecting strong performance in Asia and the
 delivery of previously announced contract wins.  However, following the
 wildfires in California, the California High Speed project has been deferred
 until further notice impacting H2.

 ·     Good profit momentum continued in the combined Automotive and
 Industrial (A&I) businesses driven by actions taken in FY23/24 to create a
 more flexible resourcing model. From a market perspective, we are seeing
 prolonged interest in internal combustion solutions across all modes of
 transport and, by managing the portfolio of solutions as one A&I business,
 we see growth in the Established portfolio partly offsetting continued
 fluctuations in demand for the Emerging portfolio. We expect continued profit
 momentum in H2 compared to H1.

 ·     Performance Products (PP) delivered good revenue and profit growth,
 thanks to a one off benefit relating to the  new large framework agreement.
 Powertrain volumes remain at consistent levels year on year, with lower
 volumes in transmissions due to two programmes drawing to a close as
 previously communicated.

 

Net debt

At 31 December 2024, net debt was £18.5m compared to £59.6m at 30 June 2024.
This reflects the receipt of £64.3m on the disposal of Defense, net of
transaction costs, and is prior to the payment of the consideration for E3
Advisory. While we retain a rigorous focus on working-capital management, our
cash conversion has reduced significantly in the six-month period because of
delayed R&D tax receipts, increased working capital in Defense and
extended invoicing profiles on some large projects, with improvement expected
in the second half.

FY 24/25 Outlook

Due to the delay in orders identified above we will be below consensus
expectation for FY 24/25. We still expect to see good Group organic underlying
profit growth for the year, in addition to the profit from the Acquisition of
E3 Advisory. H2 will show  good profit growth in EE, however due to the order
delays described above, will be broadly flat for the full year.  In A&I
we will see growth in H2 profit compared to H1 as a result of the variable
resourcing model that we established last year, but with lower order mix in
emerging solutions we will see a decline in H2 profitability year-on-year.

Graham Ritchie, Chief Executive Officer, commented:

"Ricardo has demonstrated clear execution aligned to our strategic ambition.
The two transactions support us in simplifying and focusing the Group's
portfolio, while improving our long-term quality of earnings aligned to the
environmental megatrends. By accelerating our transformation, we are creating
long-term and sustainable value for all our stakeholders.

"While we are seeing delays in orders resulting from short-term headwinds in
some of our end markets, we are encouraged by the order intake across many of
our businesses. We have recently won several key strategic contracts,
particularly in our Energy and Environment business, which gives confidence in
our continued growth over the medium term supporting both energy transition
and environmental adaptation for climate change."

Half-year results

The results for the half-year ended 31 December 2024 will be released on 5
March 2025.

-ENDS-

About Ricardo plc

 

Ricardo plc is a global strategic, environmental, and engineering consulting
company, listed on the London Stock Exchange. With over 100 years of
engineering excellence and close to 3,000 employees in more than 20 countries,
we provide exceptional levels of expertise in delivering innovative
cross-sector sustainable outcomes to support energy transition and scarce
resources, environmental services, together with safe and smart transport
solutions. Our global team of consultants, environmental specialists,
engineers, and scientists support our customers to solve the most complex and
dynamic challenges to help achieve a safe and sustainable world. Visit
www.Ricardo.com.

 

Investor contacts

Natasha Perfect

Ricardo plc

Tel 01273 455 611

Natasha.perfect@ricardo.com (mailto:Natasha.perfect@ricardo.com)

 

Elisabeth Cowell

SECNewgate

Tel 0203 757 6882

Ricardo@secnewgate.co.uk (mailto:Ricardo@secnewgate.co.uk)

 

 

 

 

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