Quarter 1 2022 ReviewApril 08, 2022
This quarter’s RO all-staff newsletter has highlighted some excellent work across the Group in the face of global challenges. CEO, Richard Jenkins, and FD, Kevin McGuigan, thanked all the Group Business teams for their incredible hard work and excellent contributions, whilst sharing their thoughts on the current trading conditions.
CEO, Richard Jenkins said: “Following the Covid years, we are now navigating our way through a new set of challenges. I am sure you are all aware of our own and our customers’ supply chain issues. These will be with us for the next 12 months at least and, together with them, will be the ongoing inflationary pressures that we are experiencing in our home and work environments.
The war in Ukraine is obviously adding to these issues and also providing a backdrop of global insecurity. However, it was great to see how much we raised for the DEC fund to support Ukraine, proving that we are able to ‘do something’ even in the face of these most significant of challenges.”
Group FD Commentary
Kevin McGuigan, Group Finance Director, said: "It has been a topsy turvey start to 2022 with different sectors having their own opportunities and challenges. Shukers is continuing to perform well as the shortage of new cars helps drive demand and profitability. Rotech is also seeing the start of the recovery in their volumes from a two-year lull during the height of the pandemic. However, issues in the global supply chain have meant that Techtron has struggled to get a consistent supply of some raw materials and bottles.
Across all businesses we are seeing some significant cost increases from suppliers due to the increase in cost of raw materials and energy. That will be putting pressure on all businesses but, as Shukers is demonstrating, that will provide opportunity as well to win new customers."
Chris Jones and Shawn Stokes at Rotech have been congratulated for successfully completing their CMI Level 5 Certificate in Management and Leadership modern apprenticeship with Corndel. Shawn also went one step further and completed the Departmental Manager Apprenticeship as part of this programme. He has been awarded with CMgr MCMI to acknowledge this achievement.
Group Business Performance
Merlin had its second most successful year in 2021 and is continuing this positive trend in 2022. Successful sales and marketing activity is driving website activity up, with total web sessions up 136% on 2021 and incoming leads in February up 230% on February 2021.
The increased digital media activity is also reflected in the upturn in the values of quotes and received orders at Merlin, with the value of quotes issued up by 200% and received orders 100% up on the same time in 2021. A great start to the year.
Rotech has seen a significant shift in customer activity in 2022 with the number of orders received per day up by 30% from the end of 2021. February and March 2022 sales have been recorded at levels not experienced since before the onset of the Covid pandemic.
The increase in the price of a barrel of oil and increased oil output across the world is seeing a return of maintenance schedules at petrochemical facilities which is driving piping, fitting and fastener production. As we emerge from the pandemic, and the wheels of industry are moving again, Rotech is benefiting.
New business in 2022 is also looking very positive and activity is roughly four months ahead of where we expected Rotech’s customers to be and Rotech is recruiting accordingly. Overall, an encouraging position to be in after two years of industrial downturn and one which the Rotech crew are meeting head-on.
Phoenix is pushing to deliver 10 rigs to customers in the first half of 2022. Many are now in their final stages of completion or waiting delivery to the customer. It is usually the case in bespoke R&D type projects that the final 10% of the project is technically the most challenging. The team are working flat out to overcome the final obstacles and pave the way for new builds and opportunities.
The service and calibration dept are working flat out to realise their highest ever revenue levels for March and April. They are currently on track to be around 6% above Q1 budget and 58% up on last year’s sales to date.
Like the S&C Dept, the Production Test Lab has had a bumper April, with both the Rolls Royce conditioning and the Low-pressure rigs fully operational.
Shukers is continuing to see strong sales demand across both Land Rover and Hyundai, however, lead times are more than 12 months for most models due to supply issues, predominantly with semi-conductor chips. Customer behaviour is changing rapidly in the current climate and the team has seen orders for next vehicles a few years in advance.
The profit for March came in considerably over budget and April and May are looking to deliver a strong performance, with a recent delivery of vehicles, though there is still little used stock available. The pricing of vehicles remains difficult for the team to manage as many vehicles are priced considerable above value, due to lack of supply.
The all-new Range Rover and Hyundai Ioniq 5 have been very positively received by our customers, although they have a lead time of circa 24 months.
The after sales departments in turn are seeing longer than usual lead times as some customers are preferring the option of maintaining their vehicles instead of exploring the usual change cycles.
We are looking forward to the arrival of the all new Range Rover Sport later in the year to continue the strong product development from Land Rover.
Rozone has had a quarter of consolidation and we have taken on some new starters who are making a positive difference to how we operate and are contributing positively to team dynamics. We are focusing on the Rubery Owen values with strong commitment across the team.
Chemical and Dry Goods sales are performing in line with budget expectation; however price stability is proving difficult with pressure building in the supply chain.
ROwasher sales are positive domestically and with our Export customers. In February we sold our 1000th machine since launching the range in 2020, with over 120 machines being sold in March alone. We are also really pleased to be able to provide onsite service for our products which is making a great impression on our customers.
We are seeing supply chain pressure being imposed because of the pandemic and now as a result of the conflict in the Ukraine. With energy costs increases, fuel cost rises, raw material shortages as well as a new plastic tax being imposed on all packing material, operating at current price levels is not possible and we are seeing increases being imposed in all areas of the business.
Rotronics got off to a good start in quarter one, despite Winter not arriving and the mild temperatures failing to highlight the serious battery issues that come with prolonged chilly conditions. Sales came in line with Budget expectations, which is an excellent result for Ken and the team.
There are several exciting high-value testing and charging projects on the go, and we are delighted that Lewis Clark has been promoted to Technical Service Supervisor.
Techtron had a stellar year in 2021. In 2022, operations have come into positive focus and our new operations manager, Dave Harmer, has a spotlight on efficiency and productivity.
Well documented supply chain issues, with blockages at ports and shortages of certain types of plastic bottles and some chemicals has had a considerable impact on Techtron. This has had an effect on production, which is a frustrating situation as the order book is extremely positive.
The team are working closely with all customers to access alternative chemicals and find a pathway to positive solutions.< Back