Rotork order intake grows but currencies headwinds drag on H1

5th Aug 2014 09:06

Improving customer activity levels in the first half of the year led to record order levels at Rotork, the oil and gas industry component maker, helping to make up for stronger currency headwinds than expected.At constant currencies, revenues rose 4.4% to £278.5m and adjusted profit before tax 5.4% to £68.4m, but profits were 1.4% lower if a 9% adverse currency impact was taken into account. Order intake was up 7.1% to £302.7m, or up 2.9% without adjusting for forex. As in previous years, the group's performance will be more weighted towards the second half, with the profit numbers implying a 57% weighting to the second half in order to hit full year forecasts. This is higher than the company's three-year average weighting of 53%, noted broker Liberum.But Chief Executive Peter France was understandably bullish about hitting targets after the encouraging movement in the market. "During the first half, we saw an increased level of activity in many of the markets that we serve and our geographic reach and broad product portfolio enabled us to secure a number of major projects," he said. "This resulted in record order intake and first half revenue despite a strengthening currency headwind." He added that due to the order book of £203m, up 7.4% from December, increased project activity and wide market exposure gave the management "confidence of achieving further progress in the full year".Adjusted basic earnings per share of 57.3p were down 0.5% or up 6.3% at constant currencies, with the interim dividend up 6.4% at 19.2p.Analysts encouraged by strong order intakeBroker Investec was encouraged by the "stand-out feature of the interim results" - the strength of the order intake. "Some of this will be due for delivery in later years, but the increased visibility is encouraging. Rotork's business review points to mixed market conditions, but there is clearly still plenty of activity and the company is taking a significant share of what is available. In our view, this again undermines the bears' view that reduced capex in the oil and gas industry will harm Rotork's growth prospects."Shares in Rotork were up 1.7% to 2,801p at 10:00, retreating slightly from six-month highs earlier in the day. OH