Engineer fails to fire on all cylinders thanks to Covid
AS companies buffeted from all angles by the virus outbreak go, Renishaw resides near the top of the list.
The precision engineer makes products used for surgeries (postponed to focus on Covid), equipment for the (largely grounded) aerospace industry and components for cars (driving levels plummeted in lockdown). On top of this, sales in its metrology arm were hit by US-China trade tensions.
This cocktail left annual sales 11% lower than last year at £510.2 million, with healthcare revenues down 15% due to postponements of elective surgeries.
Profit was just £3.2 million compared with £109.9 million last year and it plans to cut 578 jobs.
Investec analyst Scott Cagehin said: “Renishaw is exceptionally strong in its markets, its patent portfolio and financially, and cycles will turn positive at some stage. However, valuation, low visibility and Covid-19 disruption leave the shares looking vulnerable.”
The stock, which plummeted as 2276p in March, fell 10% to 4742p after the dividend was cut.
Ladbrokes owner GVC was off 3p at 782p as first-half revenues fell 10% to £1.58 billion while profits dropped to £55.4 million from £212.1 million last year. The bookie has suffered from a shutdown of live sports and its High Street betting shops, partly offset by a surge in online gaming.
Longstanding boss Kenny Alexander stepped down last month and then it said HMRC is probing its former Turkish operations.
AJ Bell investment director Russ Mould said: “While the continuing uncertainty over the coronavirus pandemic is a valid reason for holding fire on dividends, management may also have been weighing political considerations given it was a heavy user of the furlough scheme and it faces an ongoing tax investigation into its former operations in Turkey.”
The wider FTSE fell back — off 1% at 6211.17 — as yesterday’s buoyant sentiment petered out. The blue-chip index was at three-week highs but profit-taking and gloomy sentiment around US jobs figures hit trading. Builder Taylor Wimpey was the biggest riser, up 2% at123p, with ITV the biggest loser, off 4% at 63p.
Topps Tiles was one of the winners from the DIY rush in lockdown. The retailer said it is on track for “modest” profits after retail revenues rose 15.5% in the first six weeks of its final quarter. Online sales spiked in lockdown and are still healthy. Shares rose 17% to 50.7p