Rotork reports resilience in Covid-impacted year

The FTSE 250 industrial flow control engineering company said orders in the final quarter, while still down year-on-year, showed signs of recovery.

It said revenues were 7.4% lower year-on-year at £604.5m, due to subdued large project activity, customer site access issues at Rotork Site Services, and disruption to production and logistics.

Adjusted operating profit slipped 5.6% to £142.5m, while the firm’s adjusted operating margins were ahead 100 basis points at 23.6%, with all divisional margins higher, benefiting from savings generated by the board’s growth acceleration programme.

The board said the flowthrough of sales declines to adjusted operating profit from 2019 was limited to 12%, which it said demonstrated the group's improved cyclical resilience.

Year-end net cash, after the payment of the £33.9m dividend in September, was £72.0m higher year-on-year at £178.1m, while the company’s return on capital employed increased 10 basis points to 31.9%.

“Rotork delivered a resilient performance in an unprecedented period,” said chief executive officer Kevin Hostetler.

“Adjusted operating margins were 100 basis points higher year-on-year, and ahead of consensus expectations, despite sales being down on the prior period.

“Our growth acceleration programme continued to deliver planned benefits, despite the challenging external environment, and we took the opportunity to bring forward some actions scheduled for later years.”

Hostetler said that, while the outlook for the company’s end markets was improving, Covid-19-related uncertainty remained.

“Our production facilities are currently operating largely as normal, we have a solid order book and the considerable flexibility provided by our strong balance sheet.

“Our investments in IT systems, targeted geographies, innovation and new product development, and aftermarket activities are progressing well and yielding benefits.”

The company was continuing to strengthen, Kevin Hostetler said, and was “well-placed” to benefit from recovering demand.

“We remain committed to delivering sustainable mid to high single digit revenue growth and mid-20s adjusted operating margins over time.”

At 0922 GMT, shares in Rotork were up 3.6% at 370.47p.