Renold (RNO) said that the outbreak of the Coronavirus is having a direct impact on some of the AIM-listed firms’ operations and revised its profit outlook downwards.
The supplier of industrial chains and related power transmission products warned of a profit drag across February and March ‘that will not be recoverable’ before the end of the year.
The company said it is likely that adjusted operating profit will be reduced by around £1m in the year ending 31 March 2020 due to the impact on operations.
Renold blamed the extension of the Spring Festival shutdown of its Chinese factory and the extensive disruption and limited visibility of third-party supply chains in the factory and in its Australasian Chain business.
Shares in Renold dropped 13.65% to 10.88p during Friday trading
Robert Purcell, Chief Executive, said:"While the current year has been a challenging one, with difficult underlying markets, the improvements being delivered within the business are supporting our profitability.”
Renold announced in November that it experienced challenging market conditions in the first half of the year and said on Friday that the conditions have continued into the second half of the year, particularly in the US and European markets.
The company mentioned in the update that it was on track to deliver profits in line with expectations as a result of operational efficiency and flexibility in cost structures, until the coronavirus outbreak disrupted operations.
Mr. Purcell said: "Whilst market conditions remain challenging in the near term and a level of uncertainty remains over the longer-term implications of Coronavirus on our business, we are encouraged by the positive impact of our ongoing strategic initiatives.”
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