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Engineering firm says results to be at top end of expectations

Rotork (ROR) 221p

Gain to date: 40.8%

Original entry point:  Buy at 157p, 11 February 2016

Engineer Rotork (ROR) has been energised by a bullish trading update (22 Nov) which guides for 2016 results at the top end of market expectations despite challenging markets.

Reuters has revenue expectations running the gamut from £527.3m to £587m. A currency tailwind is providing significant support to the numbers – at current exchange rates it is expected to deliver a 10% benefit to both full year revenue and profit.

ROTORK - Comparison Line Chart (Rebased to first)

We added the company to our portfolio of key picks earlier this year in the expectation it would profit from a turn in fortunes for the oil and gas industry.

In the latest statement Rotork notes: ‘Certain sectors of the oil and gas market showed signs of increased activity levels in the third quarter, notably in the Middle East, Asia and North America.’

Investment in key infrastructure including IT is expected to boost operational performance, building on the foundations provided by market-leading products, strong customer relationships and a robust balance sheet.

Net debt as at 30 October totalled £70m. Full year results are scheduled to be published on 27 February 2017.

We remain positive on Rotork at 221p ahead of a more meaningful recovery in oil and gas spending. (TS)

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