Management said trading in FY18 has been "mixed", while profitability has been impacted by a number of factors.
Companies: Renold plc
Industrial gear and chain manufacturer Renold (LON: RNO) has said in its trading update today that Profits are likely to be impacted in the current financial year.
Management said trading in the six months to 30 September had been "mixed" while issuing a profit warning, saying:
"Profitability was affected by machine break-downs at our Einbeck facility and by sustained increases in raw material costs.
Consequently, the Board now expects adjusted operating profit for the Group for the year to 31 March 2018 to be slightly below the lower end of the current range of analyst forecasts."
The stock was trading down 10% at 49p at the time of writing on Thursday.
Group CEO Robert Purcell commented:
"It has been a frustrating first half for the Chain Division. Organic growth opportunities, particularly in Europe, have been converted but have failed to deliver the expected improvements in profitability due to issues at Einbeck and the rise in raw material prices."
Brokers finnCap and N+1 Singer both downgraded their forecasts, with finnCap's note this morning saying:
We are downgrading by £0.5m to give a PBT of £15.7m, with a 3.4% reduction in EPS to 5.0p... With a heavy H2 weighting in profits, we, therefore, reduce our price target to 50p and moving our rating from Buy to Hold.
Singer's note was much the same...
"We anticipate trimming our forecast for FY18 adjusted operating profit to somewhere in the £15.5-16.0m range, which would represent a downgrade of up to c.4%, although do not expect to make material changes to subsequent years."
RNO currently trades at a PE ratio of 9x versus the industry median of 17x and has a market cap of £116m.
