Industrial chain maker Renold reports organic revenue growth

Manchester-based industrial chain supplier Renold delivered organic growth, its figures for the year to March 31, showed today.

Revenues rose from £183.4m to £191.6m.

Pre-tax profis of £1.4m compared with £6.7m the for the previous year, but after adjustment for various processes, such as the after-tax effects of pension administration costs, restructuring costs, changes in provision discounts, and financing costs, they came in at £12.5m for this year, against £12.8m in 2017.

The firm said it achieved year-on-year growth in underlying orders of 7.2%, which remains strong, with order intake 5.4% ahead of revenue for the year.

It said it makes continued progress on its restructuring programme, with sub-scale manufacturing operations in New Zealand (Chain) and China (Torque Transmission) closed in the year.

And it reports good progress on the programme to relocate its Chinese chain manufacturing facility, with the construction phase nearing completion.

Chief executive Robert Purcell said: “Through a combination of strategic action and improving market conditions, we have delivered organic revenue growth for the first time in a number of years.

“Order intake continues to remain strong with order books meaningfully ahead year-on-year.

“During the year ended 31, March 2018, raw material costs increased significantly and we were too slow to respond, resulting in an ongoing lag in passing these increased costs on to customers.

“This, combined with factory disruption, impacted profitability in the first half.”

He said: “Action to pass increased costs to customers through sales price increases has been implemented and, with the factory disruption behind us, profitability increased in the second half of the year.”

He added: “For the year ahead, we expect growth to continue as improving macroeconomic conditions strengthen order intake.

“Those same macroeconomic conditions are resulting in inflationary pressures on raw material costs and labour rates, which have also been impacted by legislative changes in some territories.

“Despite this, we expect growth, recovery of material price increases and continued efficiencies to overcome cost pressures and deliver improved adjusted operating profit margins.”

And he said their restructuring programme is delivering results: “Despite the challenges this year, we have delivered a third year of stable adjusted operating profits at levels above those delivered before we commenced the STEP 2020 strategic programme.

“We believe that this demonstrates the benefits being delivered by the programme.

“Having overcome these short-term challenges, we continue to believe that the STEP 2020 strategy is the correct approach to creating and maintaining a more robust, higher margin business.”