Shares in Renishaw PLC jumped on Thursday after the firm avoided a feared profit downgrade after a better-than-expected third quarter.
‘We have continued to deliver steady growth in mixed market conditions, with improving demand from semiconductor equipment builders throughout the year and a recent rise in machine tool probing sales,’ the Gloucestershire, England-based provider of manufacturing technologies, analytical instruments, and medical devices said in a trading update.
Renishaw said pretax profit rose 20% to £28.1 million in the three months to March 31, its financial third quarter, from £23.5 million in the prior three months. Adjusted pretax profit increased 28% to £30.0 million from £23.5 million in the previous three months.
For the nine months to March 31, pretax profit was down 1.4% at £85.6 million from £86.8 million year-on-year.
Revenue increased 4.8% to £180.7 million in the three months to March 31 from £172.4 million a year prior, and by 7.9% from £167.5 million in the previous three months, with ‘solid’ order intake during the three-month period.
For the nine months, revenue rose 3.8% to £522.1 million from £502.9 million the year before.
Peel Hunt said three-month adjusted pretax profit and revenue beat its £26 million and £168 million forecasts.
Renishaw achieved good growth in sales of machine tool probes to consumer electronics customers, whilst revenues from co-ordinate measuring machines and gauging systems were steady. It also saw solid growth in demand for position encoders from semiconductor equipment builders, it said.
As a result, Renishaw now expects annual revenue in the £700 million to £720 million range, slightly lifting the bottom end of the forecast, but cutting the top end. Its previous guide was for revenue between £695 million and £735 million.
It was a similar story for adjusted pretax profit, with its guide now at £109 million to £127 million, compared to £105 million and £135 million previously.
But analysts had feared a cut to guidance.
‘Renishaw has been one of the more debated stocks in our coverage universe this year, and with investors expecting today to trigger a downgrade, there is likely to be a healthy relief rally in our view, supported by the growing news of a US/UK trade deal, given the company meets its US revenue (20% group) via exports from UK, India and Ireland,’ analysts at Jefferies said.
Shares in Renishaw jumped 16% to 2,641.86 pence each in London on Thursday morning.
Renishaw said it is impacted by tariffs and, where required, is introducing a surcharge to pass on the impact of these additional costs.
‘We continue to assess the potential global impacts of these tariffs on an ongoing basis,’ it added.
Despite the ‘volatile economic backdrop’, Renishaw said it enters the final quarter of the year with ‘good momentum’.
In addition, the firm said it is closing the loss-making drug delivery aspect of its Neurological business, which will lead to an annual increase in group operating profit of £3 million.
Exceptional closure costs of £1.9 million have been recognised in the third quarter, with an additional £1 million expected to be incurred over the next six months.
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