Renishaw (RSW) justified its lofty rating at the halfway mark, driving profits and cash flows on the back of another strong showing from its core metrology (measurement) business, where operating profits were up by a third. Group earnings benefited from a reclassification of a tax credit, but gross profits of £115m were 23 per cent in advance of the previous comparable figure.
Before investment outflows, operating cash flows all but quadrupled to £51.3m, although the precision engineer still increased its investment in research and development by 15 per cent. That’s hardly surprising given Renishaw supplies products and services at the high end of the value chain across a range of industrial segments – the business can’t afford to stand still from a technological perspective.
Trading was boosted by continued strong demand for encoder and laser calibration products within the metrology business. And although sales pulled back slightly at the smaller healthcare business, there are still strong prospects for new products, as evidenced by the growth in the neurological products line.
There was progress across the group’s locales, with Europe and the Americas both registering double-digit revenue growth. Renishaw’s markets in the Far East - its largest revenue segment - provided the standout performance, with revenues up 27 per cent, including a significant currency translation benefit.
Consensus forecasts from data service IBES give EPS of 109p for the June 2017 year-end, up from 94.9p in FY2016.
| RENISHAW (RSW) | ||||
|---|---|---|---|---|
| ORD PRICE: | 2,924p | MARKET VALUE: | £2.1bn | |
| TOUCH: | 2,923p-2,927p | 12-MONTH HIGH: | 2,995p | LOW: 1,618p |
| DIVIDEND YIELD: | 1.6% | PE RATIO: | 27 | |
| NET ASSET VALUE: | 510p* | NET CASH: | £14.0m | |
| Half-year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 (restated) | 198 | 28.6 | 32.4 | 12.5 |
| 2016 | 240 | 35.7 | 41.0 | 12.5 |
| % change | +21 | +25 | +27 | - |
Ex-div:09 Mar Payment:07 Apr *Includes intangible assets of £60.8m, or 84p a share. | ||||
