Renold warns of lower operating profits

INDUSTRIAL chains manufacturer Renold encountered more tough trading
conditions between October and the end of January and has warned the market that its operating profit in second half will be weaker than it expected.

The Manchester-based group, which trades internationally, said in a trading update that underlying revenues in the period are down 8.7% on the same period last year. So far this financial year revenues are 6.9% lower.

Renold, whose new chief executive Robert Purcell is undertaking a “fundemental review” of the company’s operating model, said the deterioration in revenue performance in the period versus the first half of the year was due to weakness in its torque transmission and in the chain division’s North American business.
 
The company said: “Actions to lower the break-even point in the vhain division continued during the period.  These included the closure of one of the two offices in Switzerland as well as a number of other headcount reductions which are benefiting the second half results.
 
“Underlying revenue in the rest of the fourth quarter is anticipated to be in line with the reductions seen in the year to date.  As a result, the board anticipates that the operating profit for the second half will now be lower than previous expectations and is likely to be broadly in line with the first half.”
 
Regarding the operational review the company said it expects to announce some preliminary findings and their impact at the time of the full year results on May 28.