Automotive growth drives strong H1 for engineering group
Engineering consultancy Ricardo has announced strong interims, benefiting from increased demand across its automotive and rail divisions.
The group, which has a large testing centre operation in Leamington Spa, is a global engineering, technical, environmental and strategic consultancy business, which also manufactures and assembles niche, high-quality and high-performance products.
For the six months to December 31, 2017, the group said it had achieved an underlying operating result in line with board expectations.
Total group revenues increased to £182.6m, which was a 9% increase on the prior period (HY 2016/17: £167m). Underlying pre-tax profit increased by 8% to £16.3m (HY 2016/17: £15.1m), with the margin reducing slightly to 8.9% from 9.0% in the prior period.
“Our global business, operating across the Automotive and Commercial Vehicles sectors, delivered a record order intake in the period, securing significant multi-year orders from a number of clients across Europe, Japan and China,” it said.
“This has extended the ageing of the order book, which also contains a greater degree of material content than in the prior period. The improvement in the flow of orders in the period has enabled a return to more efficient levels of operation, leading to a more profitable business.”
Its Performance Products division saw a strong first half. Revenues increased by 22% to £40.6m (HY 2016/17: £33.4m) and underlying operating profits increased by 15% to £3.9m (HY 2016/17: £3.4m).
The performance was principally driven by increased volumes of engines for McLaren, particularly for the higher value 720S engine, together with increased volumes of transmissions for both Bugatti and Porsche.
These were partially offset by a reduction in sales to the Motorsport and Defence sectors.
The Rail business continued the strong performance achieved during the previous year, with a record order intake reported for the opening months of the first half.
Activity in Europe was said to be buoyant, with operations in the UK, Netherlands, Spain and Denmark successfully securing new assignments.
The Asian market was particularly strong, with an increase in demand across the region for systems engineering expertise including ‘reliability, availability, maintainability and safety’ (‘RAMS’) analysis, human factors engineering, and ensuring electromagnetic compatibility.
Commenting on the results, Dave Shemmans, CEO, said: “We have traded in line with our expectations and I am pleased to see the strong order intake resulting in an increase of 31% compared to the first half of the prior year.
“We have also seen a good spread of orders across both our Technical Consulting and Performance Products businesses. This provides a good base as we head into our traditionally more profitable second half of the year.
“I am also particularly pleased with our cash performance in the period, driven by a strong working capital focus. We look forward to continued progress in the second half of the year.”
