Profits fall at Renold
INDUSTRIAL chain maker Renold today revealed a sharp fall in profits in a year of mixed fortunes at the group.
The Manchester-based company, which has been operating on the world stage for 130 years, saw pre-tax profits after exceptional items in the year to March 31, fall from £9.3m to £2.9m after a “challenging” second half. One-off charges included £2.4m in redundancy and restructuring costs.
Turnover for the period rose from £172.6m to £194.7m.
Chief executive Bob Davies said the first half started well, with pre-tax profits doubling, and it made good progress on its longer term strategic ambitions.
However, the second half saw a dramatic fall in orders and sales as a result of the global downturn, and the group took a series of cost-cutting measures including implementing a 10% cut in pay across the board.
Mr Davies said he was surprised just how rapid the fall in orders was and said as a result Renold was forced to axe around 700 jobs worldwide – around 23% of its workforce – and batten down the hatches to weather the economic storm.
Renold closed some manufacturing facilities and following acquisitions in China and India increased its production in these low-cost locations. Capital expenditure has been cut back to the bare minimum.
Mr Davies said he believes the group has now reached the bottom of the market, and following the cost-cutting measures, is beginning to gain market share.
He said: “These actions give us a significant reduction in our cost base, which together with an improved contribution margin, partially mitigates the impact of the reduced contribution resulting from lower sales revenues.
“I am very proud that all at Renold understood the need to support these actions and responded positively. I have every confidence that the group is well positioned to take advantage of recovery when markets stabilise.”
