Manufacturer warns of sustained investment to return to strong growth
Specialist valve manufacturer Rotork has warned shareholders the business will need a sustained investment programme in order to see a return to the high levels of growth previously enjoyed by the company.
The group, which has an operation in Wolverhampton, said the investment would be in both new products and services.
In a third quarter trading update, Rotork said funding for this would come from a reshaping of the group’s sales and operating infrastructure.
The process is expected to be smoother once a new chief executive is appointed.
“Working with external consultants, we are engaged in a series of reviews, to examine our routes to market, innovation funnel, operations footprint, supply chain, talent development and IT systems,” it said.
“We expect this work to yield a number of options in support of our growth and margin objectives, and to contribute significantly to the plans formulated by the new chief executive during the course of next year.
“Some initial opportunities are beginning to emerge, which we are already pursuing. The one-off costs associated with these reviews, together with any restructuring costs arising from early implementation, are anticipated to be mid-single digit £ millions for 2017, and will be separately detailed in our published full year results.”
The group said it continued to be highly cash generative with a strong balance sheet and net debt of £39m at October 29, 2017 (£55m at December 31, 2016).
Based on performance to date, with anticipated shipments in the remaining two months of the year, and a slightly reduced tailwind from currency, the group said it expected results for the full year to be in line with management expectations.
During Q3, order intake increased by 11.8% – 7.9% on an organic constant currency (OCC) basis – while revenue increased by 5.1% (+0.9% OCC), reflecting the more favourable market trends seen during the first half of the year.
The order book as of October 29 was £219.4m, 21.4% (23.2% OCC) higher than at December 31, 2016.
