Engineering consultancy Ricardo’s shares fell seven per cent today after it reported that its automotive business struggled last year.
The London-listed firm enjoyed a rise in revenue and growing order books in the year ending 30 June, but its division which serves the car industry was hit by a “pretty awful year” in the wider automotive market, according to chief executive Dave Shemmans.
Pre-tax profit declined 1.9 per cent to £26.5m over the year, amid the automotive struggles. Turnover grew two per cent to £384.4m, while net debt also grew 82 per cent to £47.4m.
The company, which manufactures the engines for all McLaren’s road cars, heralded a “resilient” performance against the backdrop of a global automotive slowdown, which has hit car manufacturers’ sales in recent months.
It made two acquisitions in Australia, one in its rail division and one in its energy and environment unit.
Ricardo’s performance products business enjoyed a 24 per cent rise in revenue, driven by greater demand for McLaren engines and an ABS brake kits contract with the US Army.
It also won contracts to support manufacturers in the electric car racing Formula E championship for the third straight year, and said it will stay involved in the Formula One championship.
Shemmans said the share price drop was a “superficial” move, which was “a strange move when there was some new positive news that was communicated”.
But, he admitted, “everybody can acknowledge that the automotive industry has had a pretty awful year, and that had an impact on us”.
Shemmans predicted “another tough year” in the car industry, and said a resolution to the US trade war with China, the world’s biggest car market, would help improve the industry’s situation.
He said Brexit uncertainty was also “hitting consumer sentiment”, hampering buyers’ abilities to purchase new cars.
Main image: Getty