U.S. News

Renishaw Shares Dive After Warning on Year Profit


British engineer Renishaw missed forecasts with a 12% fall in first-half profit and said on Wednesday weak demand and the strong pound would hit annual profit, sending its shares to a six-month low.

"The adverse effects of currency exchange rates, together with the softening of demand for our products in the CMM (coordinate measuring machine) market will result in profits for the full year being below those for last year," Renishaw said in a statement.

Renishaw, which makes measurement systems for precision machining, had been forecast to make a pretax profit of 38.3 million pounds ($76 million) in the year to end-June, up from 38.1 million pounds in 2005-06, according to Reuters Estimates.

Renishaw reported a pretax profit of 13.5 million pounds for the six months to end-December on revenue up 7% to 87 million pounds. It will pay an interim dividend of 7.05 pence, up 5.1%.

Chairman and Chief Executive David McMurty said: "Above average growth in dental, styli, machine tool and encoder products ... offset a softening in the market for CMM products."

UBS, which had forecast a profit of 15.3 million pounds, said: "The share price was discounting some downside risk to the full-year consensus, but this outcome is worse than anticipated," even though volumes held up better than expected.

At 0915 GMT, Renishaw shares, which have underperformed the electronic and electrical equipment makers sector by 30%  over the past 12 months, were down 9.1% at 727 pence to value the business at 529 million pounds.