LONDON: Shares of Rotork PLC (ROR.LN) fell as much as 16% in early trade here the other day, their biggest fall in over 15 years, after the manufacturing company warned that 2015 revenue and adjusted operating profit will be lower than last year, blaming a challenging trading environment and deferrals and cancellations of a number of projects.
Rotork, which provides solutions that manage the flow of liquids, gases powders, expects revenue for the year ended Dec. 31 to be in the range of 530 million pounds ($818.58 million) to GBP555 million, with adjusted operating profit of GBP120 million to GBP130 million.
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This compares with revenue in 2014 of GBP594.74 million and operating profit before the amortization of intangible assets of GBP157.17 million.
“We have seen an increased number of project deferrals and cancellations, with trading in August particularly weak,” the company said, adding that a number of orders expected to be placed in the third quarter have been delayed and are now expected to be delivered in 2016.
But Rotork said it continues to see an encouraging level of quote activity and a large pipeline of opportunities, but cautioned that the timing of order placement and product delivery remains difficult to forecast.
The company added that it continues to control costs and is on track to achieve the indicated savings announced at the time of its first-half earnings in August, although this won’t be enough to offset the lower profits.
In August, the company reported an 8% fall in pretax profit for the half year ended June 30, with order levels down 9.5%, which it blamed on a weak oil and gas industry due to the fall in oil prices, as well as exchange-rate hits from a stronger pound against the dollar and euro. The oil and gas unit contributes over 50% of group revenue.
At that time, it said the cost-management program had been accelerated in response to the oil and gas slowdown and expects to save GBP8 million a year after cutting staff, managing overheads and general cost cuts. It expected savings this year of GBP2 million.
At 0830 GMT, shares were down 34.5 pence, or 16%, at 181.5 pence, having fallen as low as 180.53 pence earlier in the session, and were 35% down over the last 12 months. The last time the shares fell this much was on May 18, 2000 when they dropped 18% after also warning of a difficult trading environment and saying order levels were subdued.
