Record half-year sales and a much improved outlook triggered a rush back into
That's just what investors wanted to hear, guaranteeing that they overlooked a jump in headcount and infrastructure spend that trimmed operating profit 14 per cent to £29.7m. It also helped soothe news that the Far East sales fell 9 per cent to £49.6m as Chinese sales - its largest market last year - slumped 25 per cent, largely reflecting weak demand for encoders from one electronics firm there, first flagged in October. It has since told assistant chief executive Ben Taylor that it's "just a pause"; likely to last at least three months.
European sales grew 25 per cent to £55.8m, propelled by automotive production and the civil aerospace boom. In the Americas they grew 23 per cent to £36.5m, driving revenue at the core metrology division up 10 per cent to £135.9m. Last year's acquisition of Measurement Devices and MTT helped, too. But rising costs left profits there down 8 per cent at £35.7m. Renishaw promises to keep an eye on outgoings, but still spent nearly £18m on property and equipment - more than it did in the last full year - as it gears up for recovery.
And operating losses at the smaller healthcare division grew to £6m from £4.2m, despite a 27 per cent hike in revenue. Still, rising sales of neurosurgical robots and increasing contribution from diagnostics should drive "significant improvement" during the second half.
Broker Numis Securities forecasts adjusted pre-tax profit of £75.8m in 2012 and adjusted EPS of 83.3p (£80.4m and 88p in 2011).
|ORD PRICE:||1,315p||MARKET VALUE:||£957m|
|TOUCH:||1,307-1,315p||12-MONTH HIGH:||1,886p||Low: 800p|
|DIVIDEND YIELD:||2.7%||PE RATIO:||15|
|NET ASSET VALUE:||284p*||NET CASH:||£26.6m|
|Half-year to 31 Dec||Turnover (£m)||Pre-tax profit (£m)||Earnings per share (p)||Dividend per share (p)|
Ex-div: 7 Mar
Payment: 10 Apr
*Includes intangible assets of £49m, or 68p a share
These results largely matched revised forecasts, but the bullish tone of the outlook statement is key here. Still, visibility is just one month and forecasts for global growth are poor. The shares, meanwhile, are up over 60 per cent since November and trade on 16 times forecast earnings - leaving them up with events for now. Hold.
Last IC view: Fairly priced, 915p, 21 October 2011