Renold sees good growth in chain, gears and couplings in North America
Manchester, UK -- Renold plc has released its interim results for the half year to Sept. 30, 2004. U.K.-based Renol...
Manchester, UK — Renold plc has released its interim results for the half year to Sept. 30, 2004. U.K.-based Renold is an international manufacturer and supplier of industrial chains and related power transmission products, automotive cam drive systems and machine tools and rotors with operations throughout Canada. Renold Canada Ltd. is headquartered in Brampton, Ont.
Renold plc reports that its performance is in line with expectations despite significant adverse exchange rate movements and raw material price increases
It saw a strong improvement in North America and China, but Europe remained weak. Operating profit before goodwill amortization and exceptional items amounted to 3.5 million, compared to the same period in 2003 of 3.6 million.
Renold said its new automotive facility in Germany was now operational and a new, similar facility in the U.S. is under construction. The U.S. facility will be completed during the second half of the year and will start shipping product at the end of the first half of 2005/06.
“Good progress is being made in North America, and the machine tool, gears and couplings businesses have performed well,” said Roger Leverton, chairman of Renold plc. “This is expected to continue in the second half.
“The Automotive business will continue to be adversely affected as supplier quality issues are addressed and sales demand remains at a reduced level. Operational efficiency improvements are being pursued aggressively to mitigate the impact.
“Overall, there are good growth prospects in North America for all the group’s products, but European markets remain soft and the twin pressures of exchange rates and raw material price increases continue to hinder progress of the group’s performance.”
Demand for industrial chain products during the first half reflected good growth in North America but saw weaker market conditions in Europe. Sales were 5% higher at constant exchange rates.
The U.K. chain business had a difficult first half with domestic demand flat and increased supplies to the growing North American market hit by adverse exchange rate effects and significant escalation in steel prices.
In the U.S., Jeffrey Chain experienced a strong first half with sales up 23% (at constant exchange rates) and profits were well ahead of expectations. Elsewhere in North America, Renold’s other chain businesses maintained profit levels.
The Asia Pacific region improved both sales and profits and order intake for the new operation in China was encouraging, the company reported.
The Gears and Couplings businesses increased sales and profits in the period and the benefits of integrating the three couplings units into a consolidated business are starting to show, says Renold. The Gears business was successful in mitigating raw material price increases by outsourcing initiatives. During the first half a further large order for gearboxes in China was received and the level of project activity remains strong for both Gears and Couplings.
Sales of Automotive Systems were 5% lower than the first half of last year (but level at constant exchange rates). Production efficiency improvements at Calais were offset by the U.S. dollar/Euro rate, steel prices and lower sales demand. This situation was further exacerbated by recent supplier quality issues.
Sales were 6% ahead of the previous year in Renold’s Machine Tool and Rotor business as the machine tool sector improved. Profitability was substantially better than last year with a 0.4 million profit compared with a breakeven performance in 2003/04.
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