Renold has announced FY16 results in line with our expectations. Sales fell by 8.9%, but self-help measures offset weak trading such that the adjusted operating profit and PBT fell by 8%, rather than the steeper fall which would typically be expected given Renold’s operating leverage. The group’s end markets remain volatile, but management is hopeful of some improvement in H2 17. Meanwhile the group continues to focus on its strategic plan to improve its business and improve margins to mid-teens by 2020. We do not anticipate making significant changes to our forecasts, which already assume continued difficult trading in FY17. The shares remain on a discount to the sector and we reiterate our Buy recommendation.
