Ricardo Slides as Market Uncertainty Weighs on Shares

Ricardo plc (LON: RCDO) slipped more than 3% to 220p in early Tuesday trading after the engineering and consultancy firm reaffirmed its full-year outlook but flagged ongoing market uncertainty and currency volatility.

In a trading update, the company said it expects to trade within the range of analyst forecasts for FY24/25, with 91% of its consultancy net revenue already secured. 

However, recent market turbulence has led to order and currency volatility, prompting the firm to implement additional cost-cutting measures to maintain its performance.

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The company, which is undergoing a strategic transformation towards environmental and energy transition solutions, reported strong cash conversion in the second half, anticipated to materially exceed its medium-term target. 

Cash conversion across FY24 and FY25 is expected to surpass 85%, and net debt is seen falling towards the lower end of guidance, excluding restructuring costs.

Despite positive developments in key business segments—such as major contract wins in the Energy & Environment and Rail divisions—investors appeared cautious amid wider macroeconomic concerns.

Chief Executive Officer Graham Ritchie said: “Despite the increased global and market uncertainty in the last few months… Ricardo continues to transform its portfolio, leading to a simpler, more efficient business with higher growth and higher margins.”

The company also reiterated its target of at least £10 million in incremental cost savings for FY25/26 and confirmed strong revenue visibility across all its core divisions.