Renishaw Reports Mixed Results Amid Global Uncertainties
Why we think this is bad
While Renishaw has shown some resilience with a 3.1% revenue growth and a strong cash position, there are several concerning factors that overshadow these positives. The flat adjusted operating profit margin at 15.7% indicates a lack of operational leverage despite revenue growth. More worryingly, the statutory profit before tax decreased by 3.7%, suggesting underlying challenges. The company's outlook, while projecting "steady revenue growth," is tempered by mentions of "continued global uncertainty" and "challenging market conditions." The implementation of cost reduction programs, including potential job cuts, signals a defensive stance in response to these headwinds. The presence of multiple negative indicators in the future trading outlook, such as economic uncertainty and competitive pressures, further dampens the prospects. While Renishaw maintains a solid financial foundation, the combination of these factors points to a challenging near-term environment that could impact investor sentiment and potentially the company's performance.
Key Points
- Revenue increased by 3.1% to £713.0m
- Statutory profit before tax decreased by 3.7% to £118.0m
- Adjusted profit before tax increased by 3.8% to £127.2m
- Cash and cash equivalents and bank deposits totaled £273.6m
- Adjusted operating profit margin remained flat at 15.7%
- Implementing cost reduction programs to achieve £20m annualized savings
- Expects further steady revenue growth amid continued global uncertainty
- UBS maintains "Buy" rating with 3,900.00p target, Deutsche holds "Hold" rating with 3,340.00p target
Summary
Renishaw plc reported mixed financial results for the year ended 30 June 2025. While revenue grew by 3.1% to £713.0m, statutory profit before tax decreased by 3.7% to £118.0m. The company maintained a strong cash position of £273.6m and improved cash flow from operating activities to £147.9m. However, the adjusted operating profit margin remained flat at 15.7%. Renishaw is implementing cost reduction programs in response to challenging market conditions and global uncertainties. The outlook suggests further steady revenue growth but acknowledges ongoing challenges. Broker targets vary, with UBS maintaining a "Buy" rating and a price target of 3,900.00p, while Deutsche maintains a "Hold" rating with a target of 3,340.00p.