Improved chain sales boost Renold’s prospects

CHAIN maker Renold has revealed improved fortunes for the year following a 19% increase in sales to £19m, although it still made a pre-tax loss of £1.3m (2010: £13.6m loss).

The company’s chairman, Matthew Peacock, said that it had achieved a sales growth of around £35m without any substantial increase in working capital, and that the group had “benefited greatly from the decisive management actions to structurally reduce our cost base during the global recession”.

The Wythenshawe-based company experienced a 23% growth in underlying order intake during the year, meaning that its order book was 13% stronger at the year end than it was at the start.

The bulk of the growth came from its core Renold Chain business, which experienced an underlying sales increase of 26%.

Chief executive Bob Davies said that following extensive evidence of destocking during the recession, there hadn’t been much evidence of restocking, which suggested the growth experienced in all of its geographical markets was driven by “sustainable customer demand”.

He added that although sales remained broadly flat in its other division, Renold Torque Transmissions, it had made progress through entry into the Chinese market where it was seeking opportunities by providing products for mass transit and light rail systems.

There were also a number of positives on the financial front as its historical pension deficit was cut by £21.5m to £42m at year end. It also experienced stronger cash generation during the second half of its financial year, when it generated £6m in cash before pensions contributions of £2.4m.

However, once pensions and capital expenditure commitments were stripped out, the amount of cash held by the company fell by £1m during the year to £4.9m at year-end. Net borrowings also increased by £2.1m.

Renold, which also has sites in Bredbury and Milnrow, said that it had £23.3m of credit available to it (£8.6m of which is from overseas banking facilities), but it is now in talks with “a number of interested banks” about refinancing its main £20m revolving credit facility. It said that it expects to announce a deal within six months.

Overall, Peacock said the firm had enjoyed a “robust set of full year results with excellent growth in order intake and sales being converted strongly into operating profit”.

He said: “We have now created a solid platform from which Renold can take advantage of opportunities for growth in both existing and new markets across the world. We therefore look forward to the future with confidence.”