Renishaw shares jumped by a fifth on Tuesday morning despite the FTSE 250 firm reporting a sharp drop in earnings.
The Gloucestershire-based engineering company revealed pre-tax profits slumped by 27 per cent to £56.5million in the six months ending December.
It said profits were partly impacted by lower gross margins caused by rising staff salaries, adverse currency effects, and weaker ‘production overhead absorption’ from reducing inventory.
Surge: Renishaw shares jumped by a fifth on Tuesday morning even after the firm revealed its pre-tax profits slumped by 27 per cent to £56.5million in the six months ending December
Revenue declined by 5 per cent to £330.5million due to weaker demand for position encoders from semiconductor equipment manufacturers offsetting strong growth in its industrial metrology business.
Sales were also affected by declining trade across the Americas and Europe, Middle East and Africa regions, with the latter territory impacted by lower orders for additive manufacturing and position measurement products.
However, higher demand for spectroscopy products helped turnover from analytical instruments and medical devices increase by 16 per cent.
‘We have achieved a solid performance in challenging market conditions,’ said William Lee, chief executive of Renishaw.
But Renishaw anticipates trading will improve in the second half of this year as market conditions recover.
For the 2024 financial year, the FTSE 250 group expects revenue of £675million to £715million, as well as adjusted pre-tax profits of £122million to £147million.
In the previous year, its turnover grew by 3 per cent to £688.6million, partly on the back of price hikes, while statutory pre-tax profits were relatively flat at £145.1million.
Lee added: ‘To support our through-cycle growth strategy, we are continuing to focus on productivity and to make targeted investments in our people, our production facilities, and our new product pipeline.’
Renshaw shares climbed by 19.9 per cent to 4,112.9p by midday on Tuesday.
Last year was the 50th anniversary of Renishaw’s founding by current executive chairman Sir David McMurtry and deputy chair John Deer.
The firm’s first product was a touch-trigger probe, which McMurtry, 83, invented and was used in the Olympus engines on supersonic airliner Concorde.
Nowadays, it supplies components to a wide variety of sectors, including healthcare, heavy industry, aerospace and precision manufacturing.
Renishaw benefited significantly from the global semiconductor shortage when Covid-related restrictions started loosening three years ago, and companies were accelerating investment in electronics manufacturing.
At around the same time, McMurtry and Deer, 86, tried to sell their shares in the business but gave up later that summer after failing to find a suitable buyer whose offer would protect jobs and suppliers.
