Metrology and healthcare technology group Renishaw (RSW) issued a mixed update on Friday. On the one hand, the FTSE 250 company warned that it expected to post a large drop in annual profit because of restructuring charges, yet it raised revenue guidance to £510 million.
Investors, clearly anticipating an impact on profits this year because of Covid-19, latched on to the higher sales news, sending the shares more than 5% higher to £46.56, their highest in nearly two years.
The company, which cancelled its dividend last month, said annual statutory pre-tax profit was expected to plunge on past guidance, now expecting around £4 million, compared to £109.9 million posted last year. The company had steered the market for between £31 million and £41 million before the pandemic struck.
RESHAPING THE BUSINESS
The downgrade came because of substantial restructuring costs of about £24 million, largely associated with the reorganisation of its additive manufacturing business. The company also said there would be a £22 million write-down on the value of various financial instruments, although this would not impact cash flow in any way.
The £510 million revenue outcome for the year to 30 June 2020 would still be sharply down on last year’s £574 million, while adjusted pre-tax profit, which strips out restructuring and other one-off costs, would be around £50 million, compared to £103.9 million in 2019.
‘In light of the pandemic, the board has focused on cash preservation and the group balance sheet remains strong,’ the company said.
