Rotork annual profit rises as margins improve

Rotork posted a rise in full-year profit on Tuesday as margins improved and the company said its growth acceleration programme was on track.

Pre-tax profit for 2019 was up 2.7% at £124.1m, with order intake 1.5% higher at £691.9m but revenue down 3.8% at £669.3m. Divisionally, order intake was strongest in its highest margin business, Rotork Controls.

The full-year dividend was lifted 5.1% to 6.2p a share.

Rotork said the decline in revenue was down to a reduction in large project activity, product and portfolio rationalisation and the loss of sales to sanctioned countries.

Profit was boosted by an improvement in margins, which were ahead of expectations. The adjusted operating margin was up 160 basis points to 22.6%, benefiting from the growth acceleration programme savings.

Rotork said it had delivered an "encouraging" set of results, despite large project activity slowing further as geopolitical uncertainty remained high and customers exercised more caution on capital investment decisions.

Chief executive Kevin Hostetler said: "The year was about margin improvement, cash generation and laying the foundations for sales acceleration. We made excellent progress on all pillars of the Programme, including sales force re-alignment to end markets, lean initiatives, purpose and values launches and our IT solution design. We remain committed to delivering sustainable mid to high single digit revenue growth and mid 20s adjusted operating margins over time."

Hosteler said it was too early to assess fully the potential effects of the coronavirus outbreak.

"Absent these, we were planning for modest sales growth on an organic constant currency basis and margin progress in 2020, driven by further benefits of our growth acceleration programme albeit with margin progress more gradual, reflecting our investment plans."