Rotork PLC (ROR) - oil and gas takes its toll but don’t ignore this great business
We always enjoy assessing the results from the market leading manufacturer of actuators and flow control products but, with significant exposure to oil and gas markets, had feared that the very tough market conditions would be starting to take their toll and sure enough interim results today suggest that this appears to be the case. This is a tremendous business that has delivered consistently for shareholders over the past few years, as reflected in the very high operating margins (23%) and return on capital (40%+). Any significant share price weakness could therefore be viewed as a decent buying opportunity.
Management commented how the continued weakness of the oil price and geopolitical uncertainty in some of their key markets resulted in a challenging trading environment during the first half, with lower overall activity levels and an increased number of project deferrals and cancellations. Group revenue for the 6 months to 30th June was down a modest 1.6% to £274.2m but adjusted operating profit 5.8% lower at £65.0m and adjusted basic earnings per share 5.1% lower at 5.44p. Overall oil and gas revenue fell by £14.9m compared with the first half of 2014 and now accounts for 52% of Group revenue…