Half Year 2026 Rotork PLC Earnings Call Transcript
Key Points
- Rotork PLC (RTOXF) delivered robust first-half 2026 results with revenue growth of 1.3% and adjusted operating margin expansion of 60 basis points on an OCC basis, reaching 22.4%.
- The CPI division outperformed with mid-teens revenue growth, driven by strong demand in data centers, critical HVAC, and specialty chemicals, with critical HVAC sales nearly doubling.
- Rotork Service continued to grow, now representing 24% of group sales, enhancing recurring revenue opportunities and customer relationships.
- The company maintained a peer-leading return on capital employed of 37%, reflecting its asset-light model and disciplined cost management.
- The proposed cash acquisition by ABB at 506p per share offers a 73% premium to the undisturbed share price, providing significant value to shareholders.
- Oil and gas division sales declined 8.4% due to Middle East-related disruption, with softer upstream and midstream activity and customer capital discipline.
- Group orders decreased 4% year-on-year, reflecting the impact of the oil and gas weakness despite strength in CPI and Water & Power.
- Cash conversion was lower at 79% due to temporary working capital impacts from oil and gas market volatility, affecting free cash flow generation.
- The company incurred GBP15 million in adjusting items for its ERP transformation program, along with GBP1.3 million in public offer-related costs.
- Full-year oil and gas revenues are now expected to be slightly lower year-on-year, with a gradual recovery anticipated in H2.
Good morning, everyone. Thank you for joining us today for our first half results presentation. Alongside me is Ben Peacock, our CFO. We're pleased to have the opportunity today to talk through our performance in the period, which will follow our normal format with Q&A at the end of the presentation.
We delivered a robust performance in the first half of 2026. Despite the disruptions seen in oil and gas, the group has continued to deliver growth and margin expansion, supported by the successful execution of our Growth+ strategy. These initiatives are strengthening the quality, resilience and returns of the business whilst positioning us for sustainable long-term growth. I would like to thank all of our colleagues around the world for their dedication, hard work and commitment to our continued improvements. Their efforts have been instrumental in delivering this performance and driving progress across the group.
In the first half, order trends broadly reflected the revenue performance across our divisions with a
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