Shares of precision tool maker Renishaw edged upwards this morning after dropping more than 16% yesterday when the firm admitted that revenue growth in the three months to September 30 was lower than anticipated.
Year-on-year quarterly earnings were, in fact, up from £61.3m to £70.5m – an increase of 15% – but still below planned-for revenue. First quarter pre-tax profits were down from £15.1m to £13.6m.
Renishaw, based at New Mills, Wotton-under-Edge, reported sales growth of 26% in Europe while its Americas market grew by 21%. The Far East, an area of significant growth last year, showed revenue for this quarter at a similar level to the corresponding quarter last year.
There was, however, a slowdown in an unspecified product line sold to the electronics industries.
The group’s cost base was higher mainly due to taking on more personnel to support its growing revenue and production demands as well as investment in its research and development programmes. Headcount at the end of September 2011 was up 70 at 2,745 – an increase of 538 over the 2,207 a year ago.
Chairman and chief executive Sir David McMurtry (pictured) said the group is reviewing its healthcare business and has refocused part of the activities to a smaller number of projects, with some resources diverted to its core metrology business.
The purchase of premises at Miskin, close to Cardiff, was completed on September 30. Premises have also been acquired for its Canadian and Italian subsidiaries at a total cost of £9m.
Net cash balances stood at £29.3m at the end of September compared to £34.6m at the end of June.
Sir David said the group traditionally had an order book of a little over one month’s sales value but first quarter order intake this year exceeded revenue taking the order book total to £31.9m at the end of September.
He added: “Due to current uncertainties surrounding the global economy, the board is closely monitoring costs and future recruitment strategy.”
Despite near-term challenges caused by the economic environment, however, the group remained focused on positioning itself for further long-term growth.
However, Altium analyst Steve Medlicott told the Financial Times: “Their labour costs year-on-year have gone up £24m. You need turnover growth to offset that."
The shares had risen 35p, or 4.06%, by lunchtime.
