Rotork (ROR) H1 2024 earnings summary

Executive summary

• Group revenue grew 11.6% OCC to £361m, with strong Oil & Gas and Water & Power growth, while CPI declined due to lower mining activity; adjusted operating profit rose 22.3% OCC to £76.5m.

• Adjusted operating margin improved to 21.2% from 19.5% in H1 2023, and ROCE rose to 36.9% from 32.7%.

• Strong cash conversion at 106% of adjusted operating profit; net cash at period end was £119m after share buybacks.

• Interim dividend increased 7.8% to 2.75p; £18m of £50m share buyback completed in H1.

• The Growth+ strategy and Target Segments approach are driving sales acceleration, margin improvement, and service growth, with RSS contributing 22% of group revenues.

Financial highlights

• Order intake was £374m, marginally ahead OCC despite a high base in H1 2023.

• Adjusted EPS rose 18% to 6.9p; reported basic EPS up 13.7% to 6.0p.

• OCC gross margin increased 250bps year-over-year; adjusted operating margin up 190bps OCC.

• Net working capital as a percentage of sales improved from 27.3% to 26.4%.

• Currency headwinds reduced revenue by £14.3m (3.8%) compared to H1 2023.

Outlook and guidance

• End market outlook remains positive, with encouraging order intake in June and July and strong order book visibility for H2.

• Full-year expectations unchanged; anticipate continued progress in 2024 on an OCC basis.

• FX expected to be a 4% headwind; CapEx around £15m; business transformation and ERP investment £20m; China relocation £5m.