Renold’s sales slump sparks 25% share price plunge

RENOLD, the North West based industrial chain manufacturer said today it had axed around 12% of its workforce after a sudden slump in orders.

The bad news on sales sent shares crashing 25% or 8p to 23p.

The company said the majority of the 350 redundancies had been made at its overseas operations, which span 19 countries, with the biggest manufacturing sites being in Poland, China and India.

The company, which has its headquarters near Manchester airport, and has large sites in Stockport and Rochdale, makes industrial chains and couplings. Products are used in a variety of sectors from underground transport systems to rollercoasters in theme parks.

Finance director Peter Bream told TheBusinessDesk that the group was also being impacted by the fall in the value of the pound against the dollar.

“Orders are up at actual exchange rates, but on a like-for-like basis orders are unchanged on last year, which is not too bad. But December saw a major decline in orders – it was the first time we had really a marked slowdown,” he said.

“Given everything that has happened economically over the past month, it’s not a massive surprise.”

He said all locations were feeling the effects of the global economic downturn: “Demand is slowing across the board. We operate as a global business and I don’t think we could identify one country where the business has not been hit.”

Renold said the decline in orders, particularly with regard to short-term business, meant it is difficult to obtain “an accurate view of the effect on the year”.

It said though that it expects pre-exceptional operating profit for the year will not be less than £10m, compared with £12m last year.

On a more positive note Mr Bream said the UK business, which exports worldwide, should see the benefit of the decline in the value of the pound against the euro.
Globally,the fall in the cost of raw materials should also be a benefit,  the company added.