Renishaw FY profit set to fall amid 'challenging' backdrop

FTSE 250 engineer Renishaw warned on Thursday that full-year profit was set to fall as it posted a drop in interim profit and revenue amid "challenging" trading conditions.

In the six months to 31 December, revenue declined 13% to £259.4m while adjusted pre-tax profit slumped to £14.3m from £59.6m in the same period a year ago. Renishaw pointed to a challenging backdrop due to the global macroeconomic environment and ongoing uncertainty caused by the trade war between the US and China, as well as weaker demand in the machine tool sector.

The company also noted that the first half of 2019 had benefitted from a number of large orders from end-user manufacturers of consumer electronic products in Asia Pacific, which have not been repeated this year.

Still, the group said there were "some positive indications" of recovery in the semiconductor market which have benefitted its encoder lines.

Renishaw said trading conditions are expected to remain challenging for the rest of the financial year. As a result, it expect full-year revenue to be between £530m and £560m, while adjusted pre-tax profit is set to come in at between £50m to £70m. In 2019, adjusted pre-tax profit was £103.9m.

Statutory pre-tax profit was forecast to be between £38m and £58m.

"The board believes that the structural demand drivers in our end-markets remain intact. The group is in a strong financial position and we remain confident in the group's long-term prospects due to the high quality of our people, our innovative product pipeline, extensive global sales and marketing presence and relevance to high-value manufacturing," it said.

At 1000 GMT, the shares were up 0.6% at 4,184p.