TIDMRCDO
RNS Number : 9067E
Ricardo PLC
11 November 2020
11 November 2020
Ricardo plc
Ricardo plc ("Ricardo") is a global engineering, technical,
environmental and strategic consultancy business, which also
manufactures and assembles niche, high-quality and high-performance
products.
Ricardo is today providing a trading update following the first
quarter's trading to 30 September 2020. Ricardo plans to announce
its half year results in February 2021.
Trading update
In the quarter to 30 September 2020, overall order intake was
strong at GBP105.2m, up 19% on the pre-COVID quarter to 30
September 2019 ("the prior period"). This is also up on the GBP70m
of orders received in the quarter ended 30 June 2020. All segments
delivered an increase in order intake compared to the prior period
except for Performance Products which, as expected, received fewer
orders in respect of McLaren engines.
Whilst the level of orders received in the first quarter has
been strong, the automotive order intake did include over GBP20m in
respect of two large multi-year programmes which are workable over
a longer period. In addition, we continue to experience challenging
conditions in Automotive & Industrial (A&I) EMEA and expect
the order intake that is workable in the short term to remain at a
low level in the remaining months of H1. With this mix of orders
received and forecast, we expect the Group's revenue and trading
performance to be materially more weighted towards the second half
of the current financial year than in previous years. Historically
operating profit phasing has typically been 40% H1 and 60% H2 and
in FY21, as we emerge from the impact of COVID 19, we expect this
to be approximately 25% H1 and 75% H2[1] including a contribution
from the expected HMMWV fleet retrofit contract in H2, as referred
to below.
Energy & Environment continues to perform well and secured
GBP11.7m of orders, up 29% on the prior period. Orders were
received in both the UK and internationally and were particularly
strong within the Evidence and Policy Business Unit. Here, within
the Water Team, we are seeing growth in orders from UK water
companies, with our skills in strategic water resource planning in
demand at the start of the new Asset Management Planning (AMP)
cycle. In the Policy area, the order intake has been driven by
additional support for the European Commission with their focus on
the European Green Deal and challenging 2030 decarbonisation
targets.
Rail received a good level of orders at GBP26.9m, 40% ahead of
the prior period. Within this, order intake was robust in Asia,
Australia and the Middle East and included multi-year programmes
for Qatar Rail and Sydney Metro. In the Netherlands and the UK,
customers remain cautious in the current climate with lower train
passenger levels and consulting orders continuing at a low level as
a result. Certification orders in these territories remain
resilient.
Defense secured GBP14.2m of orders, up 141% on the prior period.
Orders were primarily received in the Engineering Services part of
the business and included the first three years of the project for
the US Army's Infantry Support Vehicle, which we are delivering
alongside GM as their strategic partner. With respect to the HMMWV
fleet retrofit programme, the approval of the US President's FY21
Defense Budget, which was scheduled for 1 October 2020, has been
delayed and is now expected in December 2020.
Performance Products, including our Software business, received
orders of GBP13.2m, down 42% on the prior period. The reduced level
of orders was in line with our expectations and primarily reflects
a lower level of orders from McLaren, which is now steadily
increasing production following the shut-down in the quarter ended
30 June 2020.
A&I saw a 27% increase in order intake to GBP39.2m. In China
and EMEA, order intake was similar to the prior period, whilst in
the US we secured a higher level of orders. However, over GBP20m of
the orders received are in respect of two large multi-year
programmes and, excluding these two programmes, the workable amount
remains low in A&I EMEA in particular. The EMEA Automotive
market continues to be challenging and although there is a solid
pipeline, the placing of orders by customers remains slow. As a
result, we have implemented additional cost saving actions and have
reduced headcount in our A&I EMEA business by a further 120
people in October.
Cashflow
We continue to maintain a strong focus on cash and in the six
months to 31 December 2020 we expect a small net cash outflow in
addition to the payment of GBP5.2m of earnout costs in relation to
previous acquisitions and approximately GBP3m of redundancy
costs.
Dave Shemmans, Chief Executive Officer, commented :
I am pleased with the level of orders received in the first
quarter, being an increase on the same pre-COVID period last year.
However, with the mix of orders received and forecast within
A&I, together with the continuing challenging conditions in
A&I EMEA, we expect the Group's revenue and trading performance
to be materially more weighted towards the second half of the
current financial year than in previous years[2].
Energy & Environment continues to be our strongest
performing business, Performance Products has re-commenced engine
assembly for McLaren, and the Rail business has won some excellent
long-term projects in Australia and the Middle East. Our Defense
team awaits the decision in respect of the US President's FY21
Defense budget, which has been delayed and is now expected in
December 2020. A&I EMEA continues to receive a low level of
orders that are workable in the short term, so we have taken
further action to reduce costs.
The economic outlook continues to be uncertain and we approach
the year ahead with a degree of caution, with our non-Automotive
businesses providing some resilience against continuing challenges
in the Automotive segment. Nevertheless, we have established a firm
and diversified platform for our business and looking forward I
remain confident of the prospects for the Group.
This announcement contains inside information.
The Ricardo plc LEI number is 213800ZNYAY35F4XB814
Further enquiries:
Ricardo plc
Dave Shemmans, Chief Executive
Officer Tel: 01273 455611
Ian Gibson, Chief Financial Officer
Website: www.ricardo.com
Newgate Communications Tel: 020 7653 9842
Adam Lloyd
[1] This is an estimate only and not intended to be a forecast
of actual results or profits
[2] This is an estimate only and not intended to be a forecast
of actual results or profits
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