Industrial flow control specialist Rotork reported a 14% improvement in adjusted order intake year-on-year for its first half on Tuesday, to £340.1m, although its revenue and earnings narrowed.
The FTSE 250 company said revenue for the six months ended 30 June was down 2.9% compared to the same period last year, at £280m.
It said the rise in orders reflected an “encouraging performance” from its chemical, process and industrial, and oil and gas divisions, and price increases implemented in January and May.
Rotork said its supply chain improvement initiatives were now taking effect, with deliveries picking up through the period.
The decline in first half revenues was expected, the board said, due to supply chain challenges in the first quarter.
Rotork’s Shanghai site resumed full operation in early June following the Covid-19 lockdown, and made “good progress” in delivering delayed shipments to customers.
Adjusted operating profit fell 15% year-on-year to £53.3m in the period, while adjusted basic earnings per share were 12.7% weaker at 4.8p.
The board said the adjusted operating profit margin remained “resilient”, falling 280 basis points to 19%, amid lower volumes and the phasing of price benefit due to the record order book.
Its statutory operating margin was 180 basis points lower year-on-year, at 15.7%.
Net cash totalled £90.4m at period end on 30 June, down from £114.1m at the end of December, which Rotork said was in part due to a strategic inventory build.
The directors said the firm’s continuing work on strategy confirmed Rotork was “well-placed” to deliver on its ambition of “mid-to-high single-digit” revenue growth and “mid-20s” adjusted operating profit margins over time.
“We enter the second half with encouraging momentum, a record order book, and with our supply chain improvement actions taking effect,” said chief executive officer Kiet Huynh.
“Whilst forecasting remains challenging due to geopolitical and macroeconomic uncertainties we continue to expect our full year results will have a greater than usual weighting to the second half, which will be even more pronounced than our previous expectations if recent sterling weakness continues.
“Since presenting my first set of results in March I have spent time, together with my senior team, determining how we will deliver on our growth ambition.”
Huynh said the progress to date confirmed that the company was positioned to deliver profitable growth.
“To summarise our thinking on strategy, we will target the segments which offer the greatest opportunities for profitable growth, including those which form part of our eco-transition portfolio, whilst making ourselves as easy to do business with as we can be.
“We will expand on these themes at our capital markets event in November.”
At 1022 BST, shares in Rotork were up 3.95% at 268.2p.
Reporting by Josh White at Sharecast.com.
