Industrial chains manufacturer Renold has today pointed to challenging market conditions as it reported a decline in revenue.
While the AIM-listed manufacturer had a “stable” first quarter, market conditions in the second quarter had “weakened”, it said in trading update for the six months to September 30.
Underlying revenue for the period declined by 3.2 per cent compared to the same period the year previous.
However, on a reported basis, the group said revenue benefited from a strengthening of the US dollar and declined by 0.7 per cent.
Renold said the decline in underlying revenue reflected “deterioration” in the industrial goods sector, which was impacted by demand from distributors and original equipment manufacturers in key European and US industrial chain markets during the late summer period.
The group said a decline in order intake also reflected the more challenging market conditions.
It experienced a decline of 8.5 per cent on an underlying basis, with orders 2.4 per cent behind revenue for the period.
However, the group said it is “on course” to deliver its full-year results in line with board expectations, assuming no “significant further deterioration” in trading conditions.
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“The ongoing focus on operational efficiency is helping to offset the impact of a challenging market environment,” it said.
Renold chief executive Robert Purcell said its focus on improvements to the business structure has helped mitigate the effect of market conditions.
He said: “The sale of our South African business unit to management secures a continued route to market for the group’s products in the region permitting us to focus our capital investment in other markets with greater opportunities.
“While market conditions remain challenging in the near term, we are encouraged by the positive impact of our ongoing strategic initiatives and this underpins our confidence in the long term opportunity for Renold.”
Renold Plc share prices today dropped by 3.37 per cent, from 22.25p at last close on October 11 to 21.50p this morning.
In April, the manufacturer from the main market, which it said would help with its long-term strategic plan.
The manufacturer is due to publish its interim results on November 3.