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Summary
- Industrial Goods and services sector to play a major role in building the nation’s economy
- KLR for the half year ending 28 June 2020, recorded a 5 per cent decline in the revenue in comparison to the same period the previous year
- ROR in H1 2020 recorded a decline in the order intake of 17.1 per cent year-on-year to £300.5 million
- In H1 2020, SXS witnessed a decline in the sales of 21 per cent to £599.0 million Y-o-Y
The Covid-19 aftermath has been devastating with the greater part of the total populace constrained into lockdown and nations attempting to get a grip on the fast-evolving health crisis, the economic ramifications of the pandemic have begun rising in the form of muted growth projections and unemployment levels unheard of since the Second World War. Risk mitigation strategies are being implemented by businesses across industries to limit the effect of the looming slowdown with economies and industrial production, reaching a close halt. Along with that, limitations on the movement of individuals and goods have disrupted global supply chains, which have further exacerbated the issue for many sectors, including the industrial sector. However, as the rebuilding of the global economy has eventually started, this sector will play a key role, and the relative respite right now would be a fantastic opportunity to consider approaches to take action to rise once more.
With this, let's have a look at the financial performance of few industrial goods and services providing companies, Keller Group PLC, Rotork PLC and Spectris PLC
Keller Group PLC
Keller is a geotechnical solutions specialist, offering a wide range of services such as micro-pilling, ground anchors and grouting services. It carries out its operations in around 40 countries, operating through 50 offices.
Financial Highlights
On 4 August 2020, the company released its interim results for the half year ending 28 June 2020. The Group delivered a significant positive change in profitability and cash generation for the first half of 2019, driven by a strong first quarter and a resilient second quarter performance, which was inevitably impacted by the disruptive effects of Covid-19. It recorded a 5 per cent plunge in the revenue to £1,039.1 million due to the pandemic effect in EMEA and APAC, in comparison with the previous year, which was £1,091.7 million. However, the company recorded a growth in the underlying operating profit of 20 per cent (CER Basis) to £47.9 million (H1 2019: £38.3) million, resulting from a margin improvement in North America and the return to profit in APAC.
The proactive measures adopted by the Group in order to safeguard the margin given the lowering revenue, resulted in an increase in the operating margin to 4.6 per cent year on year (H1 2019: 3.5 per cent). The company recorded a net debt of £155 million (on a lender covenant and IAS17 basis), which was down by 54 per cent (H1 2019: £333.5 million) and also portrayed a strong liquidity position with undrawn funding of £595 million available with the company. Despite a recent decline in order intake from increased global macroeconomic uncertainty, the order book of the company stood at approximately £1 billion.
Stock Performance
Keller Group PLC (LON:KLR) stock was trading at GBX 574.00 on 4 August 2020, at 11:38 AM, up by 1.41 per cent from its previous close of GBX 566.40. The 52-week low/high price was GBX 445.50/876.00. It was having a market capitalisation (Mcap) of £408.20 million. The volume traded at the time of reporting was 127,339. The company recorded a negative return on price, which was 26.21 per cent on a YTD (Year to Date) basis.
Rotork PLC
Incorporated in the year 1957, Rotork is a United Kingdom-based company, engaged in flow control & actuator manufacturing. Covering a wide range of market, it operates in various industries such as oil and gas, marine, power generation, mining and water & sewage.
Financial Highlights
On 4 August 2020, the company released its half-yearly results (H1 2020). Rotork recorded a decline in the value of orders received during the period by 17.1 per cent year-on-year to £300.5 million (H1 2019: £362.5 million), because of a sharp reduction in global economic activity, the intense comparative period and extreme volatility in the prices of hydrocarbon. The revenue of the company declined by 11.1 per cent to £283.2 million (H1 2019: £318.6 million) due to disruptions caused by the pandemic on the production facilities. Still, it eventually increased in May and June.
Increase in refurbishment activity led to a growth in sales by 7 per cent OCC (organic constant currency). The decline in adjusted operating profit by 8.9 per cent year-on-year to £61.2 million (H1 2019: £67.2 million) reflected reduced volumes and higher logistics costs. The company's profit before tax declined by 4.3 per cent to £50.0 million (H1 2019: £52.2 million), due to lower intangible amortisation, adjustments to profit and net finance charges. Continued execution of the Growth Acceleration Programme, cost mitigation actions, reduced discretionary spend and mix resulted in an increase in the profit margins by 50bps to 21.6 per cent (H1 2019: 21.1 per cent). Rotork maintained a strong balance sheet position, bolstered by 116 per cent cash conversion, with period end net cash of £144 million. The basic earnings per share of the company were recorded as 4.4 pence, down by 4.3 per cent year on year (H1 2019: 4.6 pence).
Stock Performance
Rotork PLC (LON:ROR) stock was trading at GBX 305.60 on 4 August 2020, at 12:27 PM, up by 6.93 per cent from its previous close of GBX 285.80. The 52-week low/high price was GBX 191.30/341.20. It was having a market capitalisation (Mcap) of £2,494.30 million. The volume traded at the time of reporting was 1,305,215. The company recorded a negative return on price, which was 15.19 per cent on a YTD (Year to Date) basis.
Spectris PLC
Spectris is a United Kingdom-based provider of efficiency upgrade tools and instruments, headquartered in Egham. The operations of the company are segmented into four working divisions, i.e., Test and Measurement, Industrial Controls, Materials Analysis, and In-line Instrumentation.
Financial Highlights
On 4 August 2020, the company released its half-yearly results for the period ending 30 June 2020. The company witnessed a decline in the sales by 21.1 per cent to £599.0 million (H1 2019: £759.1 million), resulting from a 9 per cent impact from disposals, primarily related to BTG. The adjusted operating profit of the Group decreased by 47.2 per cent to £44.1 million (H1 2019: £83.5 million). LFL (Like-for-like) overheads declined by 11 per cent, resulting in an operating margin of 7.4 per cent (H1 2019: 11.0 per cent), which was 340bps lower on an LFL basis.
The company benefitted from profit improvement programme, which delivered £11 million in the first half. Also, the short-term cost measures, taken as a result of Covid-19, and the receipt of £6.7 million of Covid-19 related overseas government support, contributed to a further reduction of £21.8 million. The Group witnessed a statutory operating loss of £56.2 million (H1 2019 £46.1 million loss), because of the cost incurred in restricting activities. The cash position of the company stood firm at £94.3 million (H1 2019: net debt £312.6 million). The basic earnings per share of the company were recorded as 27.2 pence, down by 48.1 per cent year on year (H1 2019: 52.4 pence).
Stock Performance
Spectris Plc (LON:SXS) stock was trading at GBX 2,554.00 on 4 August 2020, at 12:37 PM, down by 3.40 per cent from its previous close of GBX 2,644.00. The 52-week low/high price was GBX 2,132.00/3,005.00. It was having a market capitalisation (Mcap) of £3,070.19 million. The volume traded at the time of reporting was 166,740. The company recorded a negative return on price, which was 10.74 per cent on a YTD (Year to Date) basis.
