21
October 2024
Ricardo plc ("Ricardo or the
"Group")
Strategy
update
In May 2022, the Board announced a
5-year strategy to transition the business to become a
world-leading strategic and engineering consultancy in
environmental and energy transition. The Group's portfolio is to
focus on strategic, technical, and engineering solutions at the
intersection of transport, energy and global climate
agendas.
Consistent with the Group's
strategy, Ricardo announces its intention to divest its Defense
business.
The Defense business currently sits
within the Group's 'Established Mobility' portfolio and provides
capabilities in engineering and production services for land
vehicles in the defence sector. Its solutions-products have been
the principal contributor to the Defense business' recent strong
financial performance, due to an extension contract award in
September 2023 for $385m, extending the previous Antilock Brake
System ("ABS") base three-year contract to March 2026, with
deliveries through to September 2027. To support its future
success, the Defense business is also active on several new pilot
programmes for the US Army, for which it has received initial
funding awards.
Reflecting its current strong
financial performance, the potential divestment is expected to be
dilutive to the Group's earnings per share in the near term.
Depending on the level of proceeds received from the potential
divestment, the board will consider the appropriate use of proceeds
in line with the Group's capital allocation policy. As part of
this, Ricardo has been actively exploring potential acquisition
opportunities to reinvest some or all of the proceeds in the event
of a completed divestment. Any potential acquisition would be
expected to be earnings accretive and in line with Ricardo's
strategy to increase its presence in the environmental consulting
market, thereby accelerating our portfolio transition to a
high-growth, high-margin, lower-capital intensive
business.
There can be no certainty that any
divestment or acquisition will proceed.
Ricardo Chief Executive Officer,
Graham Ritchie, said, "The proposed sale of the Group's Defense
business will enhance Ricardo's focus on growing as a leader in
environmental and energy transition markets, whilst allowing for
Defense to realise its full potential through new programme development, following the successful award of
the ABS programme."
-ENDS-
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 transport solutions. 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.