Rotork order growth accelerates in third quarter

Growth in customer orders sped up at Rotork in the third quarter as the industrial valves specialist benefited from continued improvement in upstream and downstream oil and gas markets.

Full year targets remained unchanged and executive chairman Martin Lamb reported progress in the process to appoint a new chief executive after Peter France resigned in July under pressure from the board to shift the company back to a path of higher sales and margin growth.

He said reviews of the business are underway with external consultants to provide "a number of options in support of our growth and margin objectives, and to contribute significantly to the plans formulated by the new chief executive during the course of next year". Lamb said some early ideas from the reviews were already being pursued.

The one-off costs associated with these reviews, together with any restructuring costs arising from early implementation, are anticipated to be "mid-single digit £ millions" for 2017, and will be separately detailed within the full year results.

For the three months to 29 October, order intake increased 11.8%, or 7.9% on an organic constant currency basis. This was up from input of 4.8% in the first half of the year and 2.7% in the first quarter.

Revenue swelled 5.1% in the quarter, or 0.9% OCC, which the FTSE 250 engineer said reflected a continuation of the slightly more favourable market trends seen during the first half of the year

For the year to date, order intake was up 15.3%, or 6.2% on an OCC basis, with an 8.9% increase in revenue, 0.8% OCC.

The order book at 29 October had reached £219.4m, which was up 21.4% or 23.2% OCC than at the end of December last year.

Fluid systems provided the greatest acceleration in growth in the third quarter, up 30.2%, while gears gained 14.4%.

The third quarter acceleration reflected a continued improvement in levels of activity in upstream, with a slight increase in downstream over the same period last year, the company said. Midstream has remained "challenging" but "good progress" was reported across the water, power and industrial process markets.

Geographically, growth came from the Middle East, parts of Asia, North America and Europe while Latin America remained subdued.