Renold on takeover chase after record results

AIM-listed Renold has said it is keen to pursue takeovers after delivering record results in its 2023 financial year.

The company’s pre-tax profit rose by less than a third to £22.9m from £17.3m the previous year, despite a “challenging inflation, trade and macroeconomic environment”.

Although the company saw revenue fall 2.3%, Renold said it managed to significantly improve margins, achieving a return on sales of 12.3%, an increase of 250 basis points.

The supplier of industrial chains and related power transmission products said increased capital investment over the past year has improved the company’s productivity and efficiency.

“We have a very clear strategy and we are executing on it diligently,” said CEO Robert Purcell. “Our continuous improvement initiatives are building an increasingly efficient, productive and resilient business and providing an increasingly strong platform to support our commercial initiatives.”

Following the results, the company announced its first dividend since 2005, paying 0.5 pence per share.

During the year, Renold acquired Australian company Davidson Chain for A$6 million, and chairman David Landless suggested further acquisitions were likely.

“The completion of several important strategic restructuring initiatives in recent years, as well as the reduction of debt levels and a strong balance sheet, puts the Group in a strong position to leverage value-adding acquisitions that enhance our existing market position,” he said.

Renold’s net debt stood at £24.9m at the end of March, down about £5m on the year. That means net debt was 0.6x profits, down from 0.8x profits at the end of last year.

Purcell also noted that the company “has been carefully evolving its growth strategy through acquisitions and opportunity capabilities.”

“The scale of the highly fragmented industrial chain market is clear and it is one area we are focused on in terms of acquisitions, which provides us with a number of suitably large and relatively low-risk opportunities,” he said.