Renishaw plc (LON:RSW) shares ticked up on Tuesday as the precision engineering firm said it was “confident” in its long-term prospects despite challenging market conditions caused by the coronavirus pandemic.
In a trading update for the nine months to 31 March, the FTSE 250 group reported that adjusted pre-tax profits had tumbled 60.1% to £31.8mln while revenues declined 9.6% year-on-year to £389.9mln.
The company said its trading performance had been impacted not only by the pandemic but also preceding issues including the US-China trade dispute and tough comparators from 2019 which benefitted from a number of large orders.
Renishaw added that it has also introduced a number of measures to save costs during the pandemic, including reduced hours for its employees and salary reductions for senior management.
Looking ahead, the company said it expects its adjusted pre-tax profit for the current year to be between £45-£55mln with revenues between £490-£505mln.
“Given the uncertain macroeconomic backdrop, we expect very challenging market conditions, particularly in the automotive and aerospace sectors, in the coming periods”, Renishaw said, however, it added that it was in a strong financial position and remained confident in its long-term prospects due to the “high quality of our people, our innovative product pipeline, extensive global sales and marketing presence and relevance to high-value manufacturing across all sectors”.
In a note, analysts at Peel Hunt retained their ‘hold’ rating and increased their target price to 3,450p from 2,600p, saying Renishaw had “plenty of cash liquidity and is clearly a business that should recover and subsequently thrive”.
The shares rose 1.8% to 3,844p in early trading.