In a trading statement for the period from 1 January to 29 March 2015, published ahead of its AGM later today, Rotork (LSE: ROR) has said that its order intake for the first quarter slumped 7.3%. On an organic constant currency (OCC) basis — which strips out the results of businesses acquired during 2014 and 2015 that were not consistently in both periods’ results, and which also restates 2015 results at 2014 exchange rates — the drop is almost double, at 13.1%. Rotork’s share price is currently down 2.5% in trading so far this morning.
Rotork, which designs and manufactures products to manage the flow of liquids, gases and powders in a wide range of industries, said that the decline in order intake reflects the effect of lower investment in the upstream oil and gas market, and the continued uncertainty in Russia, Eastern Europe and the Middle East. The company also said that the timing of project deliveries and a slower start to the year combined to reduce revenue in its Asia Pacific region by 6.7% (12.6% OCC).
However, despite what it describes as “a challenging first quarter”, Rotork said that its order book at the end of March was 6.5% higher than at the end of December 2014, at £196m, and that it “remains encouraged” by the levels of current project activity.
Looking ahead, the company said it sees opportunities across its key end markets, but that it anticipates “a challenging trading environment in the short term”. As a consequence, Rotork’s board said it currently expects first half results to be lower than last year.
However, it also comments that a stronger second half — boosted by current project visibility, and the strength of its product portfolio and international sales network — should enable Rotork to deliver full-year results that are in-line with management expectations.
At 2,369p, Rotork’s share price is down 13% on this time last year, since when the FTSE All-Share index has gained early 7%. But investors who’ve been in it for the long term will be happy with the 70% rise in share price over the past five years, compared to a rise of just 30% in the FTSE All-Share.
