Sterling softness underpins Renold as it shutters Lille warehouse

The London-listed company said group revenue in the period grew by 4.5% on a reported basis, reflecting the benefit of its significant non-sterling based operations.

On an underlying basis, group revenue fell by 4.0% compared to the first half of the prior year, which was still marginally ahead of previously announced expectations.

Order intake grew by 9.2% on a reported basis, or 0.2% on an underlying basis, with the underlying book to bill ratio in the period rising to 101% from 97% a year earlier.

“The level of underlying sales activity and adjusted operating profit in the period has been in line with expectations and broadly similar to the second half of the previous year,” Renold’s board said in a statement.

“However the impact of weaker sterling will boost reported results in the first half of the current year by approximately 10% which will flow into the full year results.

“At this stage, it is too early to say the extent to which the beneficial currency impact will continue into the second half of the year.”

The board said Renold’s markets remain uncertain following the referendum vote and it does not have sufficient clarity on the final quarter of the year - traditionally the strongest - to be other than cautious about the longer term outlook.

With regard to its STEP 2020 Strategic Plan, the board said subsequent to the previous announcement on 1 September it has concluded the consultation process with employees and their representatives at the European Distribution Centre near Lille in France.

“A project has now commenced to cease warehousing and distribution activities at the site.

“Our facility in Einbeck will consolidate the broader European warehousing and distribution activities with its own similar activities in Germany.”

Renold said the project is expected to complete during the third quarter of the current financial year with annualised savings of approximately £0.3m being delivered thereafter.

Independently of the consultation process, the site near Lille had been marketed for sale since January 2015, the board explained.

“The group has now signed an agreement to sell its freehold interest in the site for its current book value of approximately £1.1m.

“This sale process is expected to complete in the next few months.”

Renold said recent performance has allowed continued investment in both operating costs and capital spend to support delivery of the STEP 2020 Strategic Plan.

“Integration of the Tooth Chain acquisition continues to proceed well.

“International chain markets remain highly fragmented and management will continue to consider future acquisition opportunities which can support business growth.”

Renold expected to announce its interim results on 15 November.