Rotork PLC (LON:ROR) rallied after raising its full year guidance following a 10.2% increase in first quarter revenue on the back of a stronger-than-expected order intake.
The engineer’s shares rose 9% to 325p in morning trading.
Order intake in the three months to April 1 jumped 20.9% at actual exchange rates, with growth across all divisions after the market recovery seen in the final quarter of 2017 continued.
The order book at the start of April was £228.3mln, up 12.3% on the same time a year ago.
Rotork said customers’ spend on maintenance and upgrades has been increasing, which compensates for the lack of investment over the previous few years. The group also saw an improvement in investment in larger projects towards the end of the first quarter.
A pick-up in the oil and gas sector supported demand for its products and services both upstream and downstream. Rotork also saw “steady progress” across the industrial process market while water and power remained flat.
The company achieved growth in Asia, Europe and parts of North America but a flat performance in Middle East and Latin America.
Rotork raises full year guidance
Rotork said it expects “mid to high single digit” growth in revenues for the full year after a currency headwind of about 5%. The group had previously guided to “mid to high single digit" growth before currency headwinds.
READ: Rotork shares weak as engineer expects currency headwind on revenues and profits
It now predicts adjusted operating margins to be “slightly ahead” of the prior year rather than flat as previously estimated.
Rotork added that it is targeting "higher levels of organic growth and margins" on a "long-term and sustainable basis". It is reviewing the business and will update the market at its first half results in August.
UBS remains bullish
UBS maintained its 'buy' rating and target price of 315p, saying first quarter trading was ahead of its expectations.
"Rotork remains a top pick for us based on the combination of improving markets and significant self-help opportunity (where this statement reaffirms that we should get a more detailed update at the August H1 results)."