Renold's profits gear up after output issues tackled

Shares in Renold climbed on Wednesday after interim profit “improved significantly” following “good progress” in tackling issues that hampered last year’s results.

Compared to the same period last year, the power transmission products manufacturer saw pretax profit widen 71% to £4.1m over the six months ended 30 September as revenue increased by 4.5% to £99.7m.

These increases were driven by Renold’s core chain unit, which saw underlying operating profit increase by 56% to £9.5m, on revenue up 6.8% to £80m.

Under a new strategy, the company increased its holdings of finished products after output issues caused by factors such as machine breakdowns that plagued the business last year caused customer service issues and impacted revenues.

The outfit had cash and cash equivalents of £12.6m at 30 September, up from £9.5m at the same point last year.

Robert Purcell, chief executive of Renold, said: "I am pleased to report that we have made good progress in addressing the short-term issues encountered last year. As a result, adjusted operating profit has improved significantly and adjusted EBITDA of £11.9m is the highest delivered in the first half of a year under the strategic plan. The improvement is most pronounced in the Chain division, where we are seeing benefits from the many actions implemented."

The period saw Renold complete a new factory in the Jiangsu province of China, with the first stages of a factory transfer now underway in what will be a “major step forward” for the Chinese arm of the business according to a company statement.

"Our strategy is delivering a more robust, higher margin business and we look forward to continuing current momentum into the second half of the year," said Purcell.

The AIM traded company also appointed Victrex executive Tim Cooper, who currently serves as managing director of its industrial division, as a non-executive director.

Renold’s shares were up 7.72% at 36.80p at 1629 GMT.