1
February 2024
Ricardo plc:
Trading
update
Ricardo
plc ("Ricardo" or "the Group"), a global strategic environmental
and engineering consulting company, providing expertise at the
intersection of transport, energy, and climate agendas, today
announces its scheduled trading update ahead of the half year
results on 6 March 2024
Continued execution in the
first half and in line with guidance for the full
year
Ricardo has continued to execute
delivery of its strategic ambition in the six months to 31 December
2023 (the period). The Board confirms that it remains confident in
the operating and financial performance of the Group and is
maintaining its guidance for the full year.
Order intake in the period was up by
7% on the six months to December 2022 (the prior period) and up 37%
on the six months to June 2023 (growth of 10% and 39% respectively
on a constant currency basis). The order book at 31 December 2023
was in excess of £470m, compared to £395m at 30 June 2023 and £414m
at 31 December 2022. Revenue for the period was up by 5% (9% at
constant currency). All figures are on a continuing operations
basis.
Energy and Environment (EE), Rail
and Defense delivered good growth in the first half, while in
Automotive and Industrial (A&I), performance was lower than
expected, due to timing delays in customer orders. As a result, we
expect our Group underlying operating profit margin for the period
to reduce by c. 50 basis points (0.5%) on the prior
period.
Environmental and energy-transition
portfolio
·
EE continued to deliver good growth and benefited
from the positive performance of its recent acquisitions
·
Rail delivered growth as expected and its order
book has continued to grow
·
A&I Emerging saw a reduction in revenue
leading to a loss in the period, reflecting delays in
customer orders
Established mobility
portfolio
·
Defense grew strongly, benefiting from the good
visibility and consistent delivery of the ABS program
·
As anticipated, Performance Products (PP) revenue
declined due to lower volumes on the McLaren programme
·
A&I Established saw a reduction in revenue
reflecting timing delays of customer orders, which was partly
offset by reduced costs.
Strong cash conversion
At 31 December 2023, net debt was
£63.3m compared to £62.1m at 30 June 2023 with additional payments
relating to previous acquisitions and prior year restructuring
being funded by improved cash conversion. As we look forward to H2,
we expect net debt to remain broadly in line with December
2023.
Accelerating our operating model
transformation
A key focus for FY23/24 is to
underpin our profit guidance and to continue accelerating the
Group's transformation to become a global leader in environmental
and mobility energy transition solutions. By building a more
flexible resourcing model and increasing our resilience to order
fluctuations within A&I, whilst right-sizing and centralising
our enabling functions, we are able to underpin the Group's
business performance in the near to medium term.
Full
year outlook
The Board is maintaining its guidance
for FY23/24, underpinned by our strong order intake in the second
quarter of H1 and increased visibility for the second half of the
year.
Our EE and Rail businesses continue
to see strong growth in operating performance with an expected
stronger second half, driven by an increasing order book with
sustained demand across all segments.
We expect to see a recovery in
Performance Products driven by improving volumes in engine orders
from McLaren and in Defense, we expect the strong growth to
continue with the advancement of the ABS program.
Within A&I, following a change in
leadership and a greater focus on key
customers we are seeing improved sales
activity, with the strongest 3-month rolling order growth for the
last 6 months. This, coupled with streamlining our organisation to
support the future business mix in A&I, is providing confidence
in a recovery within the second half.
With growth weighted across all our
key end markets in the second half, accelerated by the
transformation actions in right sizing our enabling functions and
implementing our operating model, we expect to deliver improved
operating margins in H2 FY23/24.
Graham Ritchie, Chief Executive Officer,
commented:
"We are
encouraged by our continuing strategic progress and by the
performance of our businesses, with strong growth in particular
seen in EE, Rail and Defense. Market
conditions have been challenging within A&I, but with the
actions already taken and those planned in H2 to transform our
portfolio and right-size our business, we are starting to see
momentum building in the key areas that will enable the delivery of
our strategy. We remain confident in delivering our full year
underlying profit guidance for FY23/24 and remain on track for our
5-year strategic plan to more than double our operating
profit."
Half-year results
The results for the half year ended
31 December 2023 will be released on 6 March 2024.
About Ricardo plc
Ricardo plc is a global strategic,
environmental, and engineering consulting company, listed on the
London Stock Exchange. With over 100 years of engineering
excellence and close to 3,000 employees in more than 20 countries,
we provide exceptional levels of expertise in delivering innovative
cross-sector sustainable outcomes to support energy transition and
scarce resources, environmental services together with safe and
smart mobility. Our global team of consultants, environmental
specialists, engineers and scientists support our customers to
solve the most complex and dynamic challenges to help achieve a
safe and sustainable world. Visit www.ricardo.com
This announcement is released by Ricardo plc and contains
inside information for the purposes of Article 7 of the Market
Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law
by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance
with the Company's obligations under Article 17 of
MAR.
Investor contacts
Natasha Perfect
Ricardo plc
Tel 01273 455 611
Natasha.perfect@ricardo.com
Elisabeth Cowell
SECNewgate
Tel 0203 757
6882
Ricardo@secnewgate.co.uk