LONDON (ShareCast) - Engineering company Renold, which supplies industrial chains and related power transmission products, said full-year results were likely to top hopes following the closure of a UK plant.

Renold said it had finished consulting staff and unions about the proposed shutdown of its Bredbury chain factory and would now close most of the site in the first quarter of the next financial year.

The group said underlying revenue in the six months to September 30 fell 2.3% against the same time a year ago. But it made good progress in improving contribution margins which fully offset the volume reduction in the period.

In addition, overhead reductions which benefitted the second half of the prior year by £2m provided similar savings in the first half of the current year.

The group said first-half underlying adjusted operating profit would be substantially better than the first half of the prior year, although annual results would depend on the Bredbury closure and associated activities.

Second-half results should be similar to the first half and full-year results were likely to be substantially ahead of market expectations.

Chief Executive Robert Purcell said: "The closure of our Bredbury facility is a necessary step in re-engineering our business.

"The closure will significantly lower our break-even point and will add to the cost reductions being delivered in other parts of the group. We retain our focus on continuous improvement in our key business processes to deliver the first, self-help phase, of our turnaround plan."

PW

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