Rotork H1 order growth curbed by margin pressures

(Sharecast News) - Flow control specialist Rotork said on Tuesday that solid H1 order intake had been offset by softer margins and a dip in reported profits. Rotork said its Growth+ strategy continued to deliver across all divisions, with particularly strong momentum in water infrastructure and upstream oil markets. However, a shift in product mix and higher investment weighed on margins in its water and power segment.

Reported revenues were up 1.6% at £367.3m and order intake was 4.5% higher at £391.1m, but operating profits slipped 3.1% to £64.7m and operating margins contracted 90 basis points to 17.6% amid FX headwinds and transformation costs. Pre-tax profits were down 6.6% at £65.1m.

On an adjusted basis, operating profits were 5.7% higher, while operating margins expanded by 140 basis points to 22.0%, supported by efficiencies and a favourable sales mix in its oil and gas unit, where margins improved notably.

Rotork also flagged a healthy book-to-bill ratio and reiterated its FY guidance, citing visibility in its order book and pipeline.

Chief executive Kiet Huynh said: "We're pleased to see good first-half order growth across all divisions, underpinned by our Growth+ strategy. There was a particularly strong order performance in water and power driven by the Target Segment focus on markets such as water infrastructure and treatment.

"Sales momentum accelerated during the period and we are confident of further growth in the second half, supported by order-book visibility and our project pipeline."

As of 0915 BST, Rotork shares were up 1.39% at 321.20p.

Reporting by Iain Gilbert at Sharecast.com