Renishaw narrows revenue forecast and brings in tariff surcharge amid ‘volatile economic backdrop’
Advanced manufacturing technology firm Renishaw today said it is introducing a surcharge to pass on the impact of US import tariffs on its products as it revised forecasted full-year revenue forecast in the light of the “volatile economic backdrop”.
The firm, which supplies analytical instruments and medical devices as well as highly advanced machine tools to factories across the world, said the US represented approximately 20% of its global revenues while its factories were based in the UK, Ireland and India.
Renishaw’s comments in a trading update for the nine months ended 31 March cheered investors, with the group’s share price soaring by rose 9.8% mid-morning.
In its statement the group said: “While there is ongoing uncertainty around policy in the medium term, under the current regime our products imported into the USA are either impacted by aluminium and steel tariffs (based on the mass of their material content) or subject to the ‘reciprocal’ tariff regime.
“Where required, we are 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.”
Renishaw, which is headquartered in Wotton-under-Edge, Gloucestershire, also said the UK employer National Insurance (NI) changes would increase its labour costs, with the fourth quarter of its current financial year to be impacted by £1m and £4m added to its annual costs.
The firm said it had 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.
“To support our growth strategy, we continue to focus on productivity, managing our portfolio of businesses and making targeted investments in our people, our production facilities, and our new product pipeline,” it added.
“We have an exciting range of new products coming to market in the next few months that will help to drive growth in the years ahead.
“We enter the final quarter of the year with good momentum, but we are mindful of the volatile economic backdrop and its potential to impact our customers’ investment decisions. We are therefore continuing to focus on pricing strategy and cost control.
“In our interim statement, released on 13 February, we communicated that we expected full-year revenue to be in the range of £695m to £735m and adjusted profit before tax to be in the range of £105m to £135m. We now expect revenue to be in the range of £700m to £720m and adjusted profit before tax to be in the range of £109m to £127m.”
Revenue in the third quarter was £180.7m, a 5% year-on-year increase and 6% higher than the average for the first two quarters of the current full year, with a solid order intake during the three-month period, it said.
“We achieved good growth in sales of machine tool probes to consumer electronics customers, whilst revenues from co-ordinate measuring machines (CMMs) and gauging systems were steady as we work through a substantial order book,” the group said in the update.
“We also saw solid growth in demand for position encoders from semiconductor equipment builders, continuing the trend seen at the end of the first half and reported in our H1 results.”
During the period, Renishaw’s board decided to close the loss-making drug delivery aspect of its neurological business, which will lead to an annual increase in group operating profit of around £3m.
Exceptional closure costs of £1.9m have been recognised in the third quarter, with an additional around £1m expected to be incurred over the next six months.
