Outlook Statement - Full Year Results 2017

Our revenue forecasts for 2018 currently reflect improving order momentum, pointing to mid to high single digit organic revenue growth year on year. However reported results will be impacted by currency movements. Based on current rates we can expect a 4-5% headwind on both revenues and profits compared with last year.

We expect the cost environment to be generally more inflationary with pressure on wages and commodities. The pricing environment appears to have stabilised in most end markets albeit pockets of intense competition exist in more commoditised product areas. Together with significant value engineering activities and a more integrated approach to procurement, we would expect to maintain the status quo.
Adjusted operating margins are expected to be similar, with contributions from higher volumes offset by increased investments in new products, expansion of our service infrastructure, and accelerated investment in our systems and IT capabilities. These investments represent the first steps in our ambition to return the business to higher levels of underlying growth, with priority areas emanating from the strategic reviews undertaken to date.

One off costs associated with the ongoing strategic reviews, and any initial rationalisation opportunities arising from those reviews, are likely to be at similar levels in H1 to H2 last year. We will update the market on likely costs for H2 in August alongside more detail around our plans for growth acceleration and business transformation.

We expect 2018 to be a busy year for Rotork, following the appointment of our new Chief Executive, as we embark on our ambition to return the Group to its former growth and margin trajectory.