Renishaw share price soars despite profit plunging for British manufacturer
British machine and semiconductor manufacturing giant Renishaw continued to struggle in the second half of last year, following a profit warning in the first half.
The FTSE 250 listed company reported a six per cent decline in revenue for the six months to December 31, as its profits dropped to £56.5m down from £73.5m.
Despite this, its shares soared by midday, up to 4,104.00p, an increase of 19.44 per cent on the open.
It cited a slowdown in the manufacturing of technologies, down six per cent and “weak demand” for encoders for semiconductor equipment.
Renishaw said it wasn’t all bad news however, with production of analytical instruments and medical devices up 16 per cent.
In October last year, Renishaw posted a profit warning with its quarterly update, saying revenue had dropped by nine per cent.
It attributed the drop in profit and revenue in part to higher operating costs, saying the firm had “continued to take a cautious approach to recruitment” with its headcount “similar” to 30 June 2023.
The firm added it had “undertaken a targeted mutually agreed severance scheme in the UK to allow employees to voluntarily leave the company”, while also making a “major investment in employee remuneration ” to retain workers.
Renishaw warned that labour costs had gone up by 2.4 per cent following a pay review in January 2023, with around £2m linked to the severance scheme.
William Lee, the firm’s chief executive said it has “achieved a solid performance in challenging market conditions, with growth from Industrial Metrology products.. being offset by continued weak demand from some key sectors, most notably semiconductor equipment.”
“We expect an improvement in our trading performance in the second half of the financial year as market conditions improve, and as we continue to pursue a range of growth opportunities. To support our through-cycle growth strategy, we are continuing to focus on productivity and to make targeted investments in our people, our production facilities, and our new product pipeline.”
The company said it is continues “to monitor developing geopolitical tensions” for the immediate future of the business, with tensions in both Taiwan affecting the semiconductor industry, and the Red Sea, damaging global trading routes more generally. It has also benefited from the production of defence and robotics equipment.
Its board “remains confident” in its growth plan and expects its revenue to be in the range of £675m to £715m for the full year.
Over the last year, Renishaw’s share price has dropped nearly 14 per cent.