Ricardo cuts jobs as business slips to second half
Ricardo said it cut 120 jobs as the engineering group warned business would be weighted towards the second half of the year.
The group reported orders up 19% to £105.2m in its first quarter from a year earlier. But it said more than £20m of automotive and industrial (A&I) orders were over several years and that in the short term orders would stay low in the first half.
Ricardo said it typically made 40% of operating profit in the first half and 60% in the second half but that this year it expected just 25% in the first half with the rest to come as the economy emerges from Covid-19. It predicted a small net cash outflow in the first half on top of £8.2m of earnout and redundancy costs.
The company reduced headcount at the automotive and industrial business by 120 in October. It said the cuts were to reduce costs with orders slow in Europe, the Middle East and Africa. Ricardo shares fell 6.3% to 345.9p at 10:55 GMT.
Dave Shemmans, Ricardo's chief executive, said: "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. 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."
Total A&I orders rose 27% to £39.2m and energy and environment orders were up 29% to £11.7m. Rail and defence orders were up 40% and 141% respectively but performance products orders fell 42%.
Shemmans said: "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."