Specialist expertise in tools that help manufacturers maximise production doesn't count for much when core customers in China are cutting back on spending. That backdrop, coupled with a less favourable product mix, and the hiring of more staff, saw operating profit at Renishaw (RSW) more than halve to about £26m.
Management mainly blamed unusually large orders from smartphone manufacturers in the comparative period for skewing the figures. But it isn't just China that's experiencing a manufacturing slowdown - the group reported lower revenues everywhere but Europe.
Fortunately, there were some bright spots, including the increased adoption of additive manufacturing technology, which sparked huge demand for the group's medical dental product range. Together with improved appetite for spectroscopy (electromagnetic technology) products, that boosted revenue in the smaller healthcare division by 37 per cent.
Despite data pointing to persistent weakness in global industrial output, management expects underlying growth across the entire business to pick up in the second half. That faith is reflected in increased spend on new products and a £13m investment in various properties across the UK and US.
Broker Numis expects EPS of 106p in the year to June 2016, down from 168p in FY2015.
| RENISHAW (RSW) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,736p | MARKET VALUE: | £1.3bn | |
| TOUCH: | 1,730-1,736p | 12-MONTH HIGH: | 2,671p | LOW: 1,577p |
| DIVIDEND YIELD: | 2.7% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 558p | NET CASH: | £33.3m | |
| Half-year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 223.8 | 56.6 | 64.2 | 12.5 |
| 2015 | 198.5 | 26.1 | 30.7 | 12.5 |
| % change | -11 | -54 | -52 | - |
Ex-div: 3 Mar Payment: 7 Apr | ||||
