Renold Extends Gains After Plan to Close Factory: London MoverPeter Woodifield
Renold Plc rose to the highest price in more than a year, extending its advance to 21 percent since the maker of industrial chains said it plans to close a factory and the chief executive officer bought shares.
The shares gained 4.4 percent to 35.25 pence, the highest since July 2012, in London. It was the eighth-best performer in the FTSE All-Share Index. The volume of shares traded was 54 percent more than the three-month daily average.
Renold plans to close its Bredbury Chain factory in Manchester, the city in northwest England where the manufacturer is based, to reduce excess capacity. The plant wasn’t viable after incurring “significant” losses in recent years, Renold said Aug. 27.
“They are doing a lot of different things to restore margins and that is one of the major building blocks,” Chris Thomas, an analyst at Arden Partners Ltd. with a buy recommendation on the stock, said in a phone interview. “I’m not sure whether that completely addresses the capacity issue, but it reduces it significantly and is a major step forward.”
Renold will probably benefit by more than 3 million pounds ($4.7 million) a year from the plant closing, Thomas said. That compares with his estimate for pretax profit of 6.1 million pounds in the year ending March 2015. “If you can put 3 million pounds onto that it is quite a big difference.”
Chief Executive Officer Robert Purcell, who took the job in January after working at Filtrona Plc, bought 500,000 shares at 28 pence each on Aug. 29, taking his total to 3.7 million shares. Purcell has bought almost 2.9 million shares since becoming CEO. The shares closed at 25.875 pence the last trading day before he joined the company.