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Renold on the hunt for acquisitions after record results

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AIM-listed Renold said it was on the look-out for acquisitions after delivering a record performance in the 2023 financial year.

Pretax profit at the firm rose by just under a third to £22.9m, up from £17.3m last year despite the “difficult inflationary, trading and macroeconomic backdrop“.

Although the firm reported a 2.3 per cent fall in revenue, Renold said that it had managed to significantly increase its margins with a return on sales of 12.3 per cent, up 250 basis points.

Increased capital investment over the past year had improved its productivity and efficiency, the supplier of industrial chains and related power transmission products said.

“We have a very clear strategy and are executing it diligently,” boss Robert Purcell said. “Our continuous improvement initiatives are building an increasingly efficient, productive and resilient business and are providing an ever improving platform to support our commercial initiatives”.

Following the results, the firm announced its first dividend since 2005 worth 0.5p per share.

During the year Renold acquired the Australian firm Davidson Chain for AU$6m, and chair David Landless suggested that there are likely to be more takeovers to come.

“The completion of several major strategic restructuring initiatives in prior years, together with the reducing debt levels and strong balance sheet puts the Group in a strong position to capitalise on accretive acquisitions that augment our existing market position,” he said.

Renold’s net debt stood at £24.9m at the end of March, down around £5m over the course of the year. This put net debt at 0.6x earnings, down from 0.8x earnings at the end of last year.

Purcell also noted that the firm had been “carefully developing our acquisitive growth strategy and opportunity pipeline”.

“The scale of the highly fragmented industrial chain market is clear and this is the sole area that we are focussed on for acquisitions, providing us with many appropriately sized and relatively low risk opportunities,” he said.