REG - Renishaw PLC - Trading Statement

RenishawAnnouncement

10/05/2022 07:00

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RNS Number : 8498K  Renishaw PLC  10 May 2022

Renishaw plc
Trading update
10 May 2022
 

Renishaw plc, the global provider of manufacturing technologies, analytical
instruments and medical devices, publishes this trading update for the nine
months ended 31 March 2022. It contains unaudited information that covers the
first nine months of the financial year and the period since.

 

Trading activity

 

                                             9 months to 31 March 2022  9 months to 31 March 2021(2)  Change

 Manufacturing technologies                  £467.4m                    £382.1m                       +22%
 Analytical instruments and medical devices  £25.0m                     £25.3m                        -1%
 Total Revenue                               £492.4m                    £407.4m                       +21%

 Adjusted(1) Profit before tax               £124.0m                    £84.4m                        +47%
 Statutory Profit before tax                 £120.2m                    £106.3m                       +13%

 

Revenue for the nine months to 31 March 2022 was £492.4m, an increase of 21%
compared to £407.4m for the corresponding period last year.

 

In our Manufacturing technologies business, revenue for the first nine months
was £467.4m, compared with £382.1m last year(2), with growth in all our
product lines. Strong demand for our encoder product lines has largely been
driven by increased investments in industrial automation and the semiconductor
and electronics capital equipment markets. We also experienced good growth in
demand for our machine tool and co-ordinate measuring machine product lines,
where we have benefited from a recovery in investments in metal cutting
machinery and the need to measure the outputs from those processes. Revenue
from our Analytical instruments and medical devices business for the first
nine months was £25.0m, compared with £25.3m last year(2).

 

Our extensive in-house manufacturing operations, our proactive inventory
management and our continual assessment of alternative components has allowed
us to mitigate continued supply chain constraints, arising particularly due to
the global shortage of electronic components.

 

There has been a modest increase in Group headcount in the third quarter, from
4,975 at 31 December 2021 to 5,004 at 31 March 2022. In the first half of the
year, as part of our ongoing staff development and retention programmes, which
includes ensuring competitive remuneration packages, we undertook extensive
salary benchmarking exercises in certain areas of the business, including the
UK. This led to targeted investments which resulted in around £5m of
additional annual labour cost and increasing our third quarter operating
costs. We have also experienced increases in utilities costs, arising from
increased energy prices and usage and have recorded £2.0m of asset
impairments in the quarter in relation to our operations in Russia.

 

Adjusted profit before tax for the nine months to 31 March 2022 amounted to
£124.0m compared with £84.4m last year and the statutory profit before tax
amounted to £120.2m (2021: £106.3m).

 

Financial position

 

The Group balance sheet remains strong with cash and bank deposit balances
amounting to £241.1m (31 December 2021: £222.0m).

 

An interim dividend of 16.0p net per share was paid on 11 April 2022,
totalling £11.6m.

 

COVID-19 update

 

While we continue to monitor the impact of COVID-19 on our people and our
business, and retain some measures designed to minimise the risk of in-company
transmission, most of our operations are now operating on a more normalised
basis. We are closely monitoring the current lockdowns in China and are taking
mitigating actions where possible against potential business disruption. This
uncertain position makes trading levels in China in the remainder of this
financial year difficult to predict.

 

Impact of Ukraine crisis

 

Following the Russian invasion of Ukraine in February 2022, we immediately
stopped the supply of goods from the Renishaw Group to Renishaw Russia and we
are now in the process of ceasing our trading operations in Russia. Typically,
combined sales to Russia and Belarus have represented around 1% of total Group
revenue. In the third quarter, £2.0m of impairments were recorded for our
assets in Russia and we do not anticipate any further significant costs or
impairments.

 

Outlook

 

We continue to see strong demand for our product lines and have a strong order
book. Mindful of global uncertainties, we anticipate that revenue for the full
year will be between £655m and £675m, and adjusted profit before tax will be
between £155m and £170m.

 

The Board remains confident in our long-term prospects, due to our strong
financial position, the high quality of our people, our innovative product
pipeline, extensive global sales and marketing presence and relevance to
high-value manufacturing.

 

The preliminary results for the year ending 30 June 2022 will be released on
15 September.

 

 Will Lee         Allen Roberts
 Chief Executive  Group Finance Director

 10 May 2022

 

 Renishaw plc
 Registered office  New Mills, Wotton-under-Edge, Gloucestershire, GL12 8JR
 Registered number  01106260
 Telephone number   +44 (0) 1453 524524
 Website            www.renishaw.com

 

 

 

(1) Adjusted profit before tax

 

The adjustment to statutory profit relates to:

-       the accounting treatment of certain forward currency contracts
used as hedging instruments which do not qualify for hedge accounting as they
do not meet the hedge effectiveness criteria set out in the International
Accounting Standard IFRS 9 'Financial Instruments'; and

-       third-party costs relating to the formal sale process ('FSP')
concluded in July 2021.

 

The Board deems that the adjusted profit before tax better reflects the
underlying performance of the Group. The following table reconciles statutory
profit before tax to adjusted profit before tax:

                                                                                       9 months to 31 March 2022  9 months to 31 March 2021
                                                                                       £'m                        £'m

 Statutory profit before tax                                                           120.2                      106.3

 Third-party FSP costs                                                                 (0.2)                      -
 Fair value (gains)/losses on financial instruments not eligible for hedge accounting
   - reported in revenue                                                               (0.1)                      (0.2)
   - reported in (gains)/losses from the fair value of financial instruments           4.1                        (21.7)

 Adjusted profit before tax                                                            124.0                      84.4

 

 

(2) Reclassification of segmental results

In previous years, we reported the results of additive manufacturing machines
marketed and sold to medical and dental customers within Analytical
instruments and medical devices, reflecting how we managed this business. The
management of this now sits within the Additive Manufacturing product line,
with a similar customer base and risk profile to this product line, with
results and operational matters reported to the Executive Committee and Chief
Operating Decision Maker accordingly. We now therefore report the medical and
dental results within Manufacturing technologies rather than Analytical
instruments and medical devices. Comparative figures have been reclassified
accordingly. For the 9 months to 31 March 2021, revenue of £3,100,000 has
been reclassified from Analytical instruments and medical devices to
Manufacturing technologies.

 

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