Trading
update
30 January
2025
Ricardo plc ("Ricardo"), 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 5 March 2025.
Ricardo executes strategic
transformation for long-term value but delays in orders impact in
the short-term
Accelerating our transformation
Ricardo recently completed two transactions,
both of which support the Group in simplifying and focusing its
portfolio on long-term sustainable growth. The acquisition of E3
Advisory (E3A), a leading Australian infrastructure advisory firm,
offers Ricardo a compelling strategic opportunity that will add
further scope to our Energy and Environment business and
operational scale in Australia. At the same time, the timing of the
disposal of Ricardo's Defense business has optimised cash for the
Group, while accelerating its transition in line with its strategic
priority of becoming a global leader in environment and
energy-transition solutions.
Ricardo Defense
Following the disposal of the Defense business
noted above, Defense will be reported as discontinued operations.
After a peak year in FY23/24, lower volumes of its anti-lock brake
system/electronic stability control (ABS/ESC) retrofit kits led to
a decline in orders, revenue and operating profit compared to the
prior year. Good growth continued in field services support and
technical consulting.
Further progress in the first half within Ricardo's continuing
operations
Order intake for Ricardo's
continuing operations was up by 10% (11% at constant currency) for
the six months to 31 December 2024 reflecting good progress in
securing multi-year contracts. Order book was up 2% (3% at constant
currency) compared to 31 December 2023. Reported year to date
revenue increased by 1% (2% at constant currency).
|
· Energy and Environment
(EE) delivered strong order growth driven by multi-year
contract wins within air quality and policy, but phasing of orders
impacted H1 revenue and profit, due to global elections, the delay
in spend ramping for UK water asset management plan (AMP) cycles
and global macro uncertainties. We expect good profit growth in the
second half, with the impact of delays in orders reducing as we go
into the next financial year.
·
Rail saw growth in
H1, reflecting strong performance in Asia and the delivery of
previously announced contract wins. However, following the
wildfires in California, the California High Speed project has been
deferred until further notice impacting H2.
· Good profit
momentum continued in the combined Automotive and Industrial (A&I)
businesses driven by actions taken in FY23/24 to create a more
flexible resourcing model. From a market perspective, we are seeing
prolonged interest in internal combustion solutions across all
modes of transport and, by managing the portfolio of solutions as
one A&I business, we see growth in the Established portfolio
partly offsetting continued fluctuations in demand for the Emerging
portfolio. We expect continued profit momentum in H2 compared to
H1.
·
Performance
Products (PP) delivered good revenue and profit
growth, thanks to a one off benefit relating to the new large
framework agreement. Powertrain volumes remain at consistent
levels year on year, with lower volumes in transmissions due to two
programmes drawing to a close as previously
communicated.
|
Net
debt
At 31 December 2024, net debt was £18.5m
compared to £59.6m at 30 June 2024. This reflects the receipt of
£64.3m on the disposal of Defense, net of transaction costs, and is
prior to the payment of the consideration for E3 Advisory. While we
retain a rigorous focus on working-capital management, our cash
conversion has reduced significantly in the six-month period
because of delayed R&D tax receipts, increased working capital
in Defense and extended invoicing profiles on some large projects,
with improvement expected in the second half.
FY
24/25 Outlook
Due to the delay in orders identified above we
will be below consensus expectation for FY 24/25. We still expect
to see good Group organic underlying profit growth for the year, in
addition to the profit from the Acquisition of E3 Advisory. H2 will
show good profit growth in EE, however due to the order
delays described above, will be broadly flat for the full
year. In A&I we will see growth in H2 profit compared to
H1 as a result of the variable resourcing model that we established
last year, but with lower order mix in emerging solutions we will
see a decline in H2 profitability year-on-year.
Graham Ritchie, Chief Executive Officer,
commented:
"Ricardo has demonstrated clear
execution aligned to our strategic ambition. The two transactions
support us in simplifying and focusing the Group's portfolio, while
improving our long-term quality of earnings aligned to the
environmental megatrends. By accelerating our transformation, we
are creating long-term and sustainable value for all our
stakeholders.
"While we are seeing delays in orders resulting
from short-term headwinds in some of our end markets, we are
encouraged by the order intake across many of our businesses. We
have recently won several key strategic contracts, particularly in
our Energy and Environment business, which gives confidence in our
continued growth over the medium term supporting both energy
transition and environmental adaptation for climate
change."
Half-year results
The results for the half-year ended 31 December
2024 will be released on 5 March 2025.
-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.
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
