Renishaw battles multiple revenue threats

Renishaw’s machine tool probes are typically installed on new machines, but global demand for new machines reduced across the period, particularly in the aerospace, automotive and oil and gas sectors. Lower utilisation of production machinery also hit sales of the group’s calibration products. While a recovery in the semiconductor market boosted sales of optical and laser encoder products, this was not enough to counter the weakness elsewhere.

Over in the smaller healthcare division, revenue dipped by 15 per cent to £35m. With non-essential and elective operations postponed, there was lower demand for Renishaw’s medical implants, dental structures and neurological products. Meanwhile the pandemic delayed shipments of its spectroscopy equipment.

Lower overall sales, together with £24m in restructuring costs – largely relating to its metal 3D printing business – meant statutory operating profit plunged to just £6m, down from £100m a year earlier. Once finance expenses and tax are deducted, Renishaw made just £0.3m of profit for the year.

Cutting capital expenditure and reducing inventory levels helped bolster net cash (excluding lease liabilities) by 13 per cent to £109m. Still, the interim dividend was cancelled in March and no final payout has been recommended either.

The consensus forecast is that operating profit will recover to £82m in 2021.