Rotork Feels Pinch from Weak Oil and Gas, Warns on Results
Sept 17 (Reuters) – Rotork Plc forecast full-year revenue below analyst expectations as the valve-control systems maker was hurt by project deferrals and cancellations, and "particularly weak" trading in August.
Shares in the company fell about 15 percent in early trading to a more than three-year low. The stock was the biggest loser on the FTSE-250 Midcap Index on Thursday morning.
The company now expects full-year revenue to of 530 million pounds to 555 million pounds ($822-$861 million) and adjusted operating profit of 120 million pounds to 130 million pounds.
Analysts on average were expecting revenue of 571.3 million pounds for the year ending Dec. 31, according to Thomson Reuters I/B/E/S.
"A number of orders expected to be placed in the third quarter have been delayed with delivery now anticipated in 2016, impacting the group's results for the current year," the company said in a statement.
The outlook for European oil and gas companies seems grim as clients in the energy industry have already cancelled $200 billion in investments due to weak oil prices, and more cuts are likely.
Rotork, which makes valve-automation equipment used in the oil and gas, power and nuclear industries, warned in April that the timing of orders was difficult to forecast and said its full-year margins would be lower than a year earlier.
"Despite the attractiveness of its business model, it's clear that even the most loved names are failing to escape the capex cuts. We expect consensus expectations to be down about 10 percent," Morgan Stanley analysts said in a note to clients.
UBS analyst Mark Fielding said that while oil and gas was the largest area of negative development, other end-markets such as power and water also remained weak for the company. ($1 = 0.6448 pounds)
(Reporting by Roshni Menon in Bengaluru; Editing by Anupama Dwivedi and Gopakumar Warrier)
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