Shares in UK engineer Renishaw fall as profit slumps
Shares in UK engineering firm Renishaw have fallen 6.4 per cent after the company warned that trading conditions will “remain challenging” and revealed a dramatic fall in profit.
Renishaw, which makes high-tech manufacturing machines, said adjusted profit before tax was £4.3m in the three months to the end of September, just a fraction of the £32.6m profit seen a year earlier. Renishaw shares fell to £33.32 this morning.
The London-listed firm said revenue in the three months to the end of September was £124.6m, down from £154m a year earlier. In its measurement product business, which accounts for most of its activity, revenue fell to £119.7m in the latest quarter from £147.7m a year previously.
Renishaw said its profit was also hit by restructuring costs of £2m following the decision to close its manufacturing facility in Staffordshire and relocate the activities to its headquarters in Gloucestershire and its site near Cardiff.
“Trading conditions are expected to remain challenging through the remainder of this financial year driven by the global macroeconomic environment,” the company said in a statement.
Manufacturing and engineering firms have been particularly hard hit by a global economic slowdown driven by the US-China tariff wars among other factors.
British firms have also struggled under the weight of Brexit uncertainty. A combination of these forces caused UK GDP to shrink in the second quarter, with manufacturing suffering the most.
Renishaw nonetheless said it “believes that the structural demand drivers in our end-markets remain intact”. It said: “The group is in a strong financial position and remains committed to our long-term strategy of delivering growth through the development and introduction of innovative and patented products.”
“However, as previously indicated, we are focused on improving productivity and we are committed to undertaking further initiatives to reduce the group’s cost base.”
The results for the half year ending 31 December 2019 will be released on 30 January 2020.
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