Ricardo (RCDO) H2 23/24 earnings summary

Executive summary

• Achieved strong profit recovery in H2, with Automotive & Industrial returning to profit and a record 12-month order book, supporting confidence for FY24/25.

• Revenue grew 7% (9% constant currency) to £475m, with improved margins and operational efficiencies.

• Underlying operating profit rose 14% to £38.8m, and underlying PBT increased 13% to £30.5m.

• Net debt reduced to £59.6m, with underlying cash conversion at 119% and leverage at 1.25x.

• Accelerated operating model transformation, fully centralising enabling functions and embedding strategic priorities.

Financial highlights

• Revenue up 7% to £474.7m; underlying operating profit up 14% to £38.8m; underlying PBT up 13% to £30.5m.

• Underlying basic EPS increased 14% to 35.9p; dividend up 6% to 12.7p.

• Underlying operating margin improved by 60bp to 8.2%; underlying cash conversion rose to 119%.

• Net debt reduced by £2.5m to £59.6m; leverage at 1.25x EBITDA.

• Order intake was £496m, down 3% year-over-year; record 12-month order book at £396m.

Outlook and guidance

• Robust order book and pipeline visibility provide confidence in FY24/25 revenue.

• On track to double underlying operating profit in five years to FY26/27.

• Debt expected to increase due to investment in property and equipment for future growth programmes.

• Strategic focus on environmental and energy transition, digital applications, and operational transformation.

• Defense and Rail expected to maintain strong demand; Performance Products and Defense anticipate revenue moderation as major programs conclude.