Rotork shares rally on boosts to its profits and dividend cover

British industrial flow control equipment Rotork (LON:ROR) saw its shares bounce during the Tuesday session, following the publication of its positive full-year results.

Despite the fact its revenue narrowed 3.8% year-on-year, to £669.3 million, the company led a concerted cost-saving campaign and ended up booking healthy profits for the full year.

Its adjusted operating profit bounced 3.4% on-year to £151.0 million, while its adjusted PBT jumped 2.9% to £148.1 million. Alongside this, the company also reported a 160 bps rise in its adjusted operating margin, up to 22.6%.

The real headline for many though, was that Rotork improved its income-making potential for its shareholders. During FY19, its adjusted basic EPS per share grew 3.2%, to 13.0p, while its full-year dividend saw an impressive 5.1% on-year increase, to 6.2p per share.

Rotork response

Reacting to its positive results, company Chief Executive Kevin Hostetler, commented,

“Our Growth Acceleration Programme is on track and progress in 2019 was very encouraging. The year was about margin improvement, cash generation and laying the foundations for sales acceleration. We made excellent progress on all pillars of the Programme, including sales force re-alignment to end markets, lean initiatives, purpose and values launches and our IT solution design. We remain committed to delivering sustainable mid to high single digit revenue growth and mid 20s adjusted operating margins over time.”

“Looking ahead, it is too early to assess fully the potential impacts of COVID-19. Absent these, we were planning for modest sales growth on an OCC basis and margin progress in 2020, driven by further benefits of our Growth Acceleration Programme albeit with margin progress more gradual, reflecting our investment plans.”

Investor notes

Following the company’s announcement, its shares rallied 7.40% or 20.70p during Tuesday trading, up to 300.60p per share 03/03/20 14:49 GMT. Analysts from Peel Hunt reiterated its ‘Buy’ stance on Rotork stock. The Group’s p/e ratio is 22.21, their dividend yield is modest at 1.96%.



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Jamie Gordon
Senior Journalist at the UK Investor Magazine. Also a contributing writer at the Investment Observer, UK Property Journal and UK Startup Magazine. Postgraduate of King's College London with a specialisation in Business Ethics. Interested in Development Economics and David Hume.