Chain division boosts profits at Renold

Renold posted a rise in full-year operating profit and revenue on Tuesday thanks to strong growth in its chain division.

The company, which supplies industrial chains and related power transmission products, said adjusted operating profit pushed up 15.5% in the year to 31 March to £16.4m, on revenue of £202.4m, up from £190.8m.

Renold highlighted strength in the chain division, where underlying revenue grew 7.5% on the year to £163.9m and adjusted return on sales improved to 11.2% from 9.6% in 2018.

The company attributed the performance to stronger macroeconomic conditions and higher sales prices, combined with an enhanced commercial team and improved levels of customer service.

Meanwhile, the performance of the Torque Transmission division was slightly behind the previous year, reflecting a combination of expected lower long-term contract revenues and a short-term change in product mix affecting margin.

Chief executive Robert Purcell said: "The chain division has delivered encouraging organic growth as well as improved operational efficiency, increasing adjusted operating profit to record levels. The continued successful execution of the strategic plan has enabled margin improvement to be delivered in spite of labour cost inflation and the significant relocation of our Chinese factory, which will take time to ramp up to targeted output and productivity levels.

"We are mindful of these factors entering the new year, but remain confident that our strategic initiatives provide us with a clear pathway to further future progress."

At 1300 BST, the shares were up 8.6% at 31.50p.