Full Year 2024 Rotork PLC Earnings Call Transcript
Key Points
- Rotork PLC (RTOXF) achieved an 8.2% year-on-year revenue growth on an organic, constant currency basis, with significant contributions from the oil and gas, water, and power sectors.
- The company's adjusted operating margin increased by 70 basis points to 23.6%, the highest level since 2014, reflecting higher sales and solid operating leverage.
- Return on capital employed rose year on year to above 37%, showcasing Rotork PLC (RTOXF)'s efficient capital usage.
- The rebranded Rotork Service division performed strongly, growing faster than the group and contributing 23% to group revenues.
- The acquisition of NOAA, a South Korean electric actuator manufacturer, is expected to generate sales of 17.5 million pounds in 2025 at a 20% EBITDA margin, with potential for significant sales synergies.
- The CPI division's revenues were 1.1% lower year on year on an OCC basis due to reduced nickel mining project activity.
- The company faced a foreign exchange translation headwind of 24 million pounds, impacting reported revenue growth.
- The ERP system implementation costs increased from 17 million pounds to 30 million pounds, indicating a significant rise in expenses.
- The UK defined benefit pension scheme incurred a one-time non-cash settlement loss due to a buy-in policy.
- The effective tax rate increased by 70 basis points, largely driven by the increase in UK tax rates.
Good morning everyone.
Thank you for joining us as we discuss our 2024 full year results. Alongside me is Ben Peacock, our CFO.
In terms of the agenda today, I'll start with the 2024 highlights, then hand over to Ben for the Financial Review, after which I'll talk about the acquisition of NOAA, provide a growth plus update, and then discuss the outlook before ending on Q&A.
Moving to the highlights, we delivered another year of strong progress in 2024, with the growth plus strategy well established and delivering on our financial ambitions of mid to high single digit revenue growth and mid-twenties operating margins over time.
Group revenues grew 8.2% year on year on an OCC basis, with oil and gas and water and power revenues double digits higher.
CPI sales returned to growth in the second half.
Road Talk service performed very strongly, growing faster than the group, and contributed 23% to group revenues in the year.
Our adjusted operating margin increased 70 basis
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