Already a Bloomberg.com user?
Sign in with the same account.
Renishaw Plc (RSW) fell after the U.K. maker of precision tools said second-half sales will probably be stagnant as it can’t rely on extraordinary electronics orders from China that helped boost first-half revenue by 18 percent.
“Such irregular orders produce a distorting effect when comparisons are made between periods,” Renishaw said in a statement today. “It is difficult to predict with certainty the size and timing of forthcoming orders above and beyond the customary underlying order book.”
The shares slipped as much as 6.1 percent and were down 4.9 percent to 1,865 pence at 12:11 p.m., the largest decline on the FTSE 250 Index. That extended the stock’s drop this year to 9.8 percent. The volume of shares traded was 49 percent higher than the three-month daily average.
First-half profit was lower than expected on investment in new facilities and the recruitment of extra staff to cope with additional products and growth, Michael Blogg, an analyst at Investec Plc, said in a note to clients.
Revenue for the six months ended Dec. 31 rose to 174.2 million pounds ($275 million) from 147.1 million pounds a year earlier. Net income gained about 50 percent to 37.7 million pounds, while the interim dividend was raised 10 percent to 11.33 pence a share.
“Renishaw remains attractive for its long-term potential,” Blogg said. “We expect regular observers of Renishaw to understand the reasons for the lower margins and not to be deterred by fluctuations of this type.”
The company’s markets continued to show “attractive, long- term structural growth drivers” as customers invest in production systems and processes, the Wotton-Under-Edge, England-based company said in the statement. Fiscal second-half revenue will be similar to the 184.7 million pounds reported for the same period last year, it said.
Blogg, who has a hold recommendation on the stock, put his 12-month price target under review and said he expects to lower his full-year pretax profit estimate by about 6 million pounds, to about 90 million pounds.
The company should continue to trade well, driven by global demand for manufacturing sophistication and automation, Scott Cagehin, an analyst at Numis Securities Ltd., said in a note to clients. Cagehin, who has a hold rating, left his full-year estimates unchanged.
To contact the reporter on this story: Peter Woodifield in Edinburgh at email@example.com.
To contact the editor responsible for this story: Douglas Lytle at firstname.lastname@example.org.