Sparks

Renold’s sales were £123.4m, up by 0.6% at constant exchange rates, while adjusted operating profit was £15.2m (2023: £15.0m), up 4.0% at constant exchange rates. The company’s margins expanded by a further 30bps to 12.3% (2023: 12.0%), with adjusted EPS up by 10.5% to 4.2p (2023: 3.8p). Renold’s net debt at 30 September 2024 was £42.2m (31 March 2024: £24.9m) after the MAC Chain acquisition and deferred Industrias YUK acquisition costs. The company’s balance sheet remains strong, with net debt/adjusted EBITDA at 1.0x.

The Chain division’s revenue declined by 1.8% to £97.1m, while adjusted operating profit was £15.5m, down by 1.9%, with margins flat at 16.0%. Renold’s revenue by region (at constant exchange rates) was: Europe -1.8%, Americas 0.9%, Australasian 20.4%, India 17.0% and China -6.7%. The company’s order intake at constant exchange rates increased by 4.8% to £92.6m.

Torque Transmission’s revenues rose by 2.8% to £29.6m, with growth in the US, Chinese and French markets offsetting a slowdown in Spain and the Gears business. Operating profit at constant exchange rates increased by £0.5m to £5.1m and return on sales improved by 150bps to 17.5% (2023: 16.0%). Order intake at constant exchange rates increased by 3.6%, excluding a large military order.

Renold’s H1 order intake was up by 11.5% y-o-y, including a £10.6m military contract win for the Royal Canadian Navy. The order book at 30 September 2024 stood at £80.8m (30 September 2023: £83.6m). Renold is continuing to improve productivity, reduce costs and capital investment, accelerating the integration of group-wide supply chains and increasing operational capabilities. While there are no signs of economic improvement in end markets and Renold’s facility in Valencia was affected by the floods (estimated impact of c £1m), the board remains confident of delivering underlying full-year results in line with market expectations (consensus operating profit of £30.3m, EPS of 7.9p and DPS of 0.5p, according to LSEG Data & Analytics). Renold currently trades on a forward P/E of 7.3x.