Bath specialist engineering group Rotork has embarked on a series of root-and-branch reviews of the business as it looks to return to higher levels of growth and appoints a new chief executive.
The group, a world-leader in the design and manufacture of specialist valves for the oil and gas industry, said it is already going after opportunities identified by the reviews, which could also result in some cost savings. 
The work – and any associated restructuring from it – is likely to cost “mid-single digit millions of pounds”, the group said in a trading update released to the London Stock Exchange yesterday, some six months on from its previous chief executive’s sudden departure.
Rotork said the reviews, undertaken by external consultants, were examining its routes to market, innovation funnel, operations footprint, supply chain, talent development and IT systems.
“As previously communicated, we are committed, over time, to returning Rotork to the higher levels of organic growth and margins previously delivered by the group. This will require a significant increase in investment in new products and service, funded primarily by a reshaping of our sales and operating infrastructure.
“We expect this work to yield a number of options in support of our growth and margin objectives, and to contribute significantly to the plans formulated by the new chief executive during the course of next year. Some initial opportunities are beginning to emerge, which we are already pursuing,” it said in the update.
Previous chief executive Peter France suddenly quit through mutual agreement with the board in June. He had worked at Rotork for 28 years in a range of roles, nine of them as chief executive.
At the time the group said it was implementing a change in strategy to return to stronger growth.
The group, Bath’s largest engineering business, has suffered from weak margins on its products as a result of the low oil price over the past two years and downturn in its key markets. While the fall in the pound’s value since the EU referendum has eased its problems, some analysts believe it could have done more to cut costs and enter new markets.
Yesterday’s trading update, for the three months to October 29, showed group order intake in up 11.8%, while revenue increased by 5.1%. The group said this reflected a continuation of the “slightly more favourable” market trends of the first half of the year.
The order book at October 29 was £219.4m, – 21.4% higher than at the turn of the year. Growth was spread across the Middle East, parts of Asia, North America and Europe while Latin America remained subdued.
The results reflected a continued improvement in levels of activity in upstream markets, it said, although there was a slight increase in downstream. There had also been good progress across its water, power and industrial process markets.
Rotork said the process to appoint a new chief executive was progressing.
The group continues to be highly cash generative, it said, with a strong balance sheet and net debt of £39m at October 29 against £55m at December 31 last year.
“Based on our performance to date, anticipated shipments in the remaining two months of the year, and a slightly reduced tailwind from currency, results for the full year remain in line with management expectations,” it said.
