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Renishaw rings the changes

There's a change at the top at the Gloucestershire-based engineering group
January 25, 2018

Renishaw (RSW) reported a 20 per cent increase in constant currency revenues at the half-year mark, together with a 73 per cent rise in adjusted pre-tax profits to £62.3m. The Gloucestershire-based engineering group also revealed a £17.2m improvement in its net cash position despite substantive increases in net engineering expenditure and inventory.

IC TIP: Hold at 5045p

With all the comparators moving in the right direction, you might have expected the share price to follow suit, but a double-digit markdown ensued. Whether this represents a delayed reaction to news that the group’s founder, Sir David McMurtry, had stepped down as chief executive is difficult to say, although analysts at Peel Hunt have previously highlighted “concerns about management succession”. In rebuttal, the board could certainly point to a degree of continuity, given Sir David will be staying on as executive chairman in support of his successor, sales and marketing director William Lee.

There was no weakening across the group’s geographies. Any investor anxieties over a detrimental Brexit effect were belied by an 18 per cent rise in European revenue to £71.8m. Shareholders can also take heart from an improved showing in the Far Eastern and American markets, with revenues up 21 per cent and 26 per cent respectively at constant currencies.

Peel Hunt forecasts adjusted pre-tax profit of £117m for the June 2018 year-end, leading to EPS of 138p, against £109m and 132p in FY2017.   

RENISHAW (RSW)   
ORD PRICE:5,045pMARKET VALUE:£ 3.67bn
TOUCH:5,035-5,045p12-MONTH HIGH:5,820pLOW: 2,791p
DIVIDEND YIELD:1.1%PE RATIO:27
NET ASSET VALUE:675pNET CASH:£69.1m
Half-year toTurnover   Pre-taxEarnings perDividend
31 Dec (£m) profit (£m)share (p) per share (p)
201623825.329.412.5
201727966.277.014.0
% change+17+162+162+12
Ex-div:08 Mar   
Payment:09 Apr