Rotork plc, the FTSE 250-listed actuator specialist, sparked an engineering stock market rally now, by announcing a PS50m share buyback, which saw its shares rise more than 8% in the mid-morning session on the London Stock Exchange.
The action, with a stable full-year financial perspective, hints at a strong level of confidence in the company to be in the successful clean energy and industrial automation industry, defying a greater industry downturn.
The press release highlights Rotork’s strategic shift to high-margin growth opportunities such as hydrogen infrastructure and offshore wind projects as the world goes through decarbonisation. The management has emphasised strong order intake across sustainable technologies as one of the pillars of its resilience because its bookings have increased by 12% so far.
Rotork also continues to project underlying operating profit continuing at PS140 million to PS150 million with a slight increase in revenue of 5-7% despite headwinds in supply chain volatility and geopolitical tensions, challenges to a fiscal year ending in December 2025.
This optimistic opinion comes against the backdrop of the new dawn of optimism in the UK industrials as government subsidies of net-zero activities have triggered capital expenditure.
Recent signs by the Chancellor on the prospective Budget of improved R&D tax credits have added to the optimism, with companies such as Rotork, a major supplier of utilities and the oil industry, moving over to renewables, being the best beneficiaries. The stock that had been trading at 312 pence before the news, increased to 338 pence by noon and bringing close to PS200 million to the market cap of the firm and was better than the flat performance of the FTSE 250.
Analysts celebrated the buyback as a pure vote of confidence, and a number of them have raised their targets. The London-based equity researcher noted that Rotork is not affected by cyclical declines in more traditional manufacturing due to its exposure to the electrification megatrends.
The programme is to be implemented in the next six months through open market purchases so as to optimise capital structure and to increase shareholder returns, where a progressive dividend policy still remains at 14.5 pence per share.
The wider British engineering tide of fortune that Rotork has been part of has seen exports to Europe and Asia bouncing back since Brexit. The actuators used in the company are electric, which are critical in controlling the flow accurately in the pipelines and turbines, and their demand has increased due to the spillovers of the Green Deal and the US Inflation Reduction Act in the EU.
Examples of this diversification can be recent contracts in Saudi Arabia in blue hydrogen push and projects in Scottish tidal energy farms to decrease dependence on fluctuating oil and gas areas, which currently contribute to less than 30% of revenues.