Ricardo (RCDO) H1 24/25 earnings summary

Executive summary

• Achieved strategic milestones with the divestment of the US defense business and acquisition of E3 Advisory, accelerating the focus on energy transition and environmental adaptation.

• Over 80% of profit now comes from higher-margin, higher-growth environmental and energy transition services.

• Delivered strong year-on-year profit improvement, with margin gains and robust order intake across key segments.

• Robust order book of £393m, up from £356m at June 2024, underpins medium-term confidence.

• Strategic focus on cost control, portfolio transition, and resilient end markets to support future growth.

Financial highlights

• Revenue from continuing operations rose 2% year-over-year to £169.1m; total group revenue declined 5% due to Defense disposal.

• Underlying operating profit from continuing operations increased to £8.3m (up 730% year-over-year); margin improved to 4.9% from 0.6%.

• EPS up over 200% to 4.7p; net debt reduced by £41.1m to £18.5m, leverage at 0.6x.

• Interim dividend of 1.7p declared, maintaining cover of 2.5–3x.

• Cash conversion at 13% due to delayed receipts and invoicing profile changes; free cash flow was £(9.5)m.

Outlook and guidance

• Group organic revenue growth targeted at mid-single digits per annum, trending towards a 10% underlying operating profit margin.

• EE business expected to deliver double-digit revenue growth with mid to high teens margin; rail and A&I to deliver single-digit growth with double-digit and high single-digit margins, respectively.

• H2 cash performance expected to improve with focus on working capital and delayed RDEC receipt.

• Focus on operational efficiency, recurring and digital revenue streams, and continued portfolio transition.

• Rail H2 impacted by California High Speed Rail pause; Emerging A&I to see lower order mix.