UPDATE: Renold Orders Pick Up Following Loss

8th Jun 2010 13:20

(Adds executive and analyst comment.) By Jason Douglas Of DOW JONES NEWSWIRES LONDON (Dow Jones)--Chain maker Renold PLC (RNO.LN) Tuesday said sales and orders improved significantly during the past few months and it expects to return to profitability this fiscal year. The company earlier reported a loss for the year to end-March because of a slump in demand made worse by customers working through inventories rather than ordering new stock. Renold Group Chief Executive Officer Bob Davies told Dow Jones Newswires Renold is reasonably confident the current recovery in demand is sustainable, despite few signs customers are meaningfully re-stocking with bigger, long-term orders. Most are for quick delivery, he said. Renold, which supplies customers ranging from mining companies to lumber yards, Tuesday reported a pretax loss of GBP13.6 million for the year to March 31, compared with a profit of GBP2.9 million for the year earlier. Revenue declined 20% to GBP156.1 million as Renold's customers, faced with a fall in demand for their own products, worked through inventories rather than spend cash on new equipment. Earnings were also weighed on by lay offs and the costs of a refinancing. Davies said Renold has since started some hiring again. Broker Singer Capital Markets said Renold's losses were slightly better than forecast and increased its earnings per share forecast for fiscal 2011 by 3%. Nevertheless, shares in Renold were down 3 pence, or 11%, at 24.75 pence at 1209 GMT, underperforming a 1% lower Dow Jones U.K. Smaller Companies index. FinnCap analyst David Buxton said there's nothing in Renold's results or outlook to account for the fall and suggested investors use the weakness as an opportunity to buy stock. Davies told Dow Jones Newswires Renold is on the hunt for acquisitions. Recently-acquired businesses in India and China provided entry to new markets and low-cost manufacturing, and Renold is eager to benefit from opportunities to buy up small chain makers and expand its torque transmission unit, Davies said. The torque transmission unit, which makes gears, couplings and gearboxes, is expecting a small fillip from the soccer World Cup in South Africa this year because its components are in back-up generators being sought by broadcasters, he added. -By Jason Douglas, Dow Jones Newswires; 44-20-7842-9272; [email protected] (END) Dow Jones Newswires June 08, 2010 08:20 ET (12:20 GMT)