Sales trend hearten Renold after tough year

8th Jun 2010 16:24

Industrial chains and torque transmission products maker Renold said last year was a difficult one for it as it fell into the red.Loss before tax in the year to 31 March 2010 was £13.6m versus a profit of £2.9m the year before. The group said it returned to operating profit in the second half (before exceptional costs) while sales and order intake improved from the second to third quarter and again in the fourth.Revenue dipped to £156.1m from £194.7m."The final quarter of 2009/10 revealed an encouraging trend in sales growth which has continued into 2010/11. Whilst sales visibility is still unclear, the strong start to the year leaves the company well placed to deliver upon expectations," said Matthew Peacock, chairman of Renold.The shares took a hammering on the announcement of the results but broker FinnCap thinks the setback represents a buying opportunity."With considerable operational gearing even on a lacklustre economic recovery profits should see considerable upside. We rate the shares a BUY with a 60p fair value," the broker said.