Renold PLC (LON:RNO) shares fell on Monday as the chain and gears maker flagged up challenging market conditions in a trading update although it still expects full-year results to be will be in line with the company's expectations assuming no significant further deterioration in trading conditions.
In an update covering the six months to 30 September, the AIM-listed firm said that following a stable first quarter of the year, macro-economic conditions weakened during the second quarter and group underlying revenue fell by 3.2% versus the same period in the prior year, although on a reported basis, revenue benefited from a strengthening of the US dollar and only declined by 0.7%.
The company pointed out that order intake in the period also reflected the more challenging market conditions with a decline of 8.5% on an underlying basis, and orders 2.4% behind revenue for the period.
Despite the backdrop, the group said it continues to see the benefits of improved operational efficiency as a result of its strategic initiatives and ongoing investment and, in addition, "proactive cost action is underway to align the business with demand levels and help mitigate the impact of market weakness."
Renold added that recent order intake trends suggest that current market weakness will continue into the second half of the year, however, as previously indicated, it expects the second half to benefit from an increasing contribution from an ongoing ramp-up in efficiency at its new Chinese factory, together with further cost reduction activities across the group.
Robert Purcell, the firm's chief executive, commented: "Whilst market conditions remain challenging in the near term, we are encouraged by the positive impact of our ongoing strategic initiatives and this underpins our confidence in the long term opportunity for Renold."
In late morning trading, Renold shares were down 3.4% to 21.5p.