Renold’s profits jump as demand returns
DEMAND has returned at industrial chain maker Renold where first quarter profits have beaten management targets.
The Manchester company, which also makes gearboxes and couplings, said orders were up by 30% on last year as customers around the world begin to restock after surviving the worst of the downturn. Orders for industrial chains were up by 50%.
Sales began to pick up towards the end of its financial year in March and have continued, resulting in a, “profit well ahead of the board’s expectations”.
“Order intake for the quarter has exceeded sales leading to an increased order book and a more favourable outlook for the half year to 30 September 2010,” said the company in a trading statement covering the three months since April 1.
“The recovery in activity levels is being seen across all regions with the largest gains predominantly arising in those Western economies which saw the steepest falls during the recession,” said the company.
It added: “Destocking by customers contributed to a significant element of the shortfall last year. It is the board’s view that destocking has largely ended and there are instances of customer restocking.”
Renold said sales visibility beyond the half year was limited and the board admitted it did not know if the current momentum could be maintained in the second half.
In June the group said sales for the year to March 31 were down 20% to £156.1m. Renold reported a pre-tax loss of £13.6m, down from a profit of £2.9m the previous year.
