Renishaw has published a trading update for the nine months ended 31 March 2020.
Revenue for the first three quarters of the current financial year was £389.9m, compared to £431.1m for the corresponding period last year.
In Renishaw’s metrology business revenue amounted to £365.9m compared to £404.5m last year.
Adjusted profit before tax for the first three quarters amounted to £31.8m compared with £79.6m last year and the statutory profit before tax amounted to £19.7m (2019: £84.8m).
Adjusted profit in the third quarter benefitted from reduced operating costs, primarily arising from initiatives undertaken before the outbreak of the global pandemic, and a favourable currency impact from forward contracts compared to the first half year.
The global macroeconomic environment has been challenging for the Renishaw Group during this nine-month period. Even before the pandemic, Renishaw stated that they were facing trading challenges including the ongoing uncertainty caused by the trade tensions between the USA and China and weaker demand in the machine tool sector. Renishaw also faced tough comparators with the 2019 trading year, which benefitted from a number of large orders from end-user manufacturers of consumer electronic products in the APAC region which have not been repeated this year. However, despite subdued demand conditions overall, Renishaw have seen growth in their optical and laser encoder product lines due to a recovery in the semiconductor market.
During the third quarter Renishaw initially experienced reduced demand in China due to the Chinese Government’s actions to deal with the COVID-19 outbreak, but have since seen a good recovery as factories have reopened. In EMEA and Americas markets Renishaw did not experience a significant change in demand as a result of the pandemic during the quarter, but believe that the effects will begin to be felt in the coming months.
The Group balance sheet remains strong with net cash balances of £94.0m as at 31 March 2020 (30 June 2019: £106.8m).
Based on recent order trends and customer feedback, Renishaw now expect full year revenue to be in the range of approximately £490m to £505m. Adjusted profit before tax is now expected to be in the range of approximately £45m to £55m with profits in quarter four expected to benefit from ongoing reduced operating costs and a repeat of the favourable currency impact from forward contracts seen in the third quarter. Statutory profit before tax is expected to be in the range of approximately £31m to £41m.
Given the uncertain macroeconomic backdrop, Renishaw expect very challenging market conditions, particularly in the automotive and aerospace sectors, in the coming periods.
Renishaw’s number one priority continues to be the health and welfare of our employees, their families and the wider communities in which we operate. Since January we have implemented a wide range of measures to protect against the spread of COVID-19 at our sites around the world and we continue to monitor the impact of the pandemic, including a response and mitigation committee which has met daily since February.
All Renishaw manufacturing facilities around the world remain open, although most are operating at lower capacity due to reductions in staff numbers caused by a combination of school closures, shielding due to health conditions, or local operating restrictions. Renishaw has been able to maintain supply to customers during this challenging period, but this is a constantly evolving situation and we continue to closely monitor all aspects of our supply chain and are taking mitigating actions where necessary.
For more information: www.renishaw.com