Rotork is a market-leading global provider of mission-critical intelligent flow control and instrumentation solutions for Oil & Gas, Water and Wastewater, Power, Chemical, Process and Industrial applications. Its shares have a premium listing on the London Stock Exchange (symbol: ROR), have a market cap of £2.8bn and are a constituent of the FTSE 250 index.
We were delighted to welcome CEO Kiet Huynh, CFO Ben Peacock and Director of Investor Relations Andrew Carter, to the latest Yellowstone Advisory webinar to present the full year 2023 results. A recording of the webinar is available here.
The presentation started with the key drivers that underpin Rotork’s growth strategy and why they are confident they can deliver mid to high single digit revenue growth. The first growth driver is the company’s’ exposure to three industrial megatrends: Automation; Electrification and Digitalisation. These mega trends are coupled with the Growth+ strategy which consists of three pillars: Target Segments; Customer Value and Innovative products and services. The Growth+ strategy and exposure to industrial megatrends are both underpinned by the foundations of enabling a sustainable future.
Rotork delivered a strong financial performance in 2023 and had a particularly strong second half. Revenue growth came in at almost 14% (OCC), ROCE improved to 33.9%, the margin grew 60bps to 22.9% and the company ended the year with net cash of £134m after achieving 120% cash conversion. The company also announced a £50m share buy back and is confident that they have a flexible balance sheet that can cope with potential M&A opportunities. They were also particularly pleased with their performance on a couple of non-financial measures and highlighted the improvement in Lost Time Injury Reported (LTIR) and their receipt of a “AAA” rating from the MSCI for their ESG performance. Rotork is particularly pleased that they have been able to make progress on their sustainability targets alongside delivering financial returns and highlighted that Scope 1 and 2 emissions have been reduced by 11%.
We were then reminded of the key components of the Growth+ strategy which has been so successful since its launch. The target segments are niche markets with good growth, where Rotork has market leading products and which have the capability to produce good profits. Other segments aren’t being ignored but the target segments are the clear focus for achieving their growth aspirations. The customer value pillar is all about putting the customer at…
