Nuclear contracts drive trading at engineer Renew

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ENGINEER Renew Holdings reported strong trading in its first quarter following a 27 per cent rise in its order book and a good performance in all its markets.

The Leeds-based group, which counts Sellafield nuclear plant, Northumbrian Water and Network Rail among its biggest clients, said its order book at the end of December stood at £433m, up from £340m last year.

The firm, Yorkshire’s third best share performer in 2013, said trading is well ahead of last year and this is expected to continue for the rest of the first half.

It reported a strong performance in its specialist engineering division, particularly so in infrastructure where its rail business reported record levels of activity.

In energy, revenue in nuclear was at record levels.

Renew’s chairman Roy Harrison told shareholders at the group’s annual general meeting yesterday that in the environmental market, its recently acquired water subsidiary Lewis is performing ahead of expectations.

Analyst Nick Spoliar at WH Ireland said: “Our pre-tax profit forecasts are upgraded for 2014 and 2015 on the back of the strong first quarter trading revealed in Renew’s AGM update this morning.

“Given the weighty order book, we believe further potential upside remains, and we note the growing cash on the balance sheet which augurs well for potential future earnings enhancing acquisitions.”

Mr Harrison said the board will update the market at the end of March ahead of the interim results on May 20.

Following record results at the end of last year, Renew has set itself the target of becoming a £500m turnover company within the next three years, driven by acquisitions and organic growth.

Renew’s chief executive Brian May said: “We’re seeing good organic growth, but we’re likely to need further acquisitions if we want to get to £500m turnover.”

Finance director John Samuel added that the group is likely to do two acquisitions over the coming months.

“We’re debt free and we have a very supportive lender in HSBC. I doubt we’d buy a business that cost more than £30m, ” he said. “We’re not looking at businesses that would bring in less than £1m to the bottom line.”

Paula Dillon, President of Leeds Chamber Commerce.

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