Renold warns of 'direct impact' to operations from coronavirus

Power transmission products supplier Renold warned on Friday that some "challenging market conditions" and the outbreak of the Wuhan coronavirus would have a direct impact on certain facets of operations.

Renold previously told investors back in November that it had experienced challenging market conditions in the first half of the year and, as anticipated, those conditions continued into the second half of the year - with the greatest weakness evident in the US and European markets.

Despite the negative effect of subdued demand on revenues, Renold said it had continued to be "effective" in mitigating impacts through improved operational efficiency and utilising flexibility within cost structures.

As a result, the AIM-listed group said it was originally on track to deliver an adjusted operating profit for the year in line with current market expectations.

However, the COVID-19 outbreak resulted in an extension of the Spring Festival shutdown of its Chinese factory by almost a month.

Renold said: "The extensive disruption and the limited visibility of third party supply chains into both the Chinese factory and our Australasian Chain business, means that there remains uncertainty as to the performance of these business units over the coming months."

"The board estimates, based on current information, that the effects described above are likely to reduce adjusted operating profit by approximately £1m in the year to 31 March 2020."

As of 1000 GMT, Renold shares had slumped 14.68% to 10.75p.