Renishaw reports £43.4m pre-tax profit despite 2% revenue decline in H1 2021 financials

Global engineering firm Renishaw has reported a pre-tax profit of £43.4 million in its H1 2021 financial results despite seeing its annual revenue decline by 2%. 

Renishaw, which reports its H1 2021 financials from June 30th 2020 to December 31st 2020, generated £255.1 million in revenue, 2% less than the £259.4 million reported over H1 2020. The firm’s revenue decrease can largely be attributed to its Metrology segment, which also fell by 2% during the period, something it has blamed on the ongoing impact of COVID-19. 

The revenue result had little influence on Renishaw’s share price, as it declined slightly from £62.35 to £62.17 in early morning trading. Given that the company’s shares have increased by 54% since the start of 2021, and its revenue results have been relatively steady, it’s understandable that there has been little movement. 

In a call with analysts and investors, Will Lee, Chief Executive of Renishaw, explained that the firm’s efficiency measures have enabled it to stay profitable in spite of market turbulents. “As part of our strategy, we’ve been looking at efficiency across the group and making sure we are managing our costs very well,” said Lee. 

“We have had a significant restructuring, a reduction in the group headcount, and our expenditure on both travel and exhibitions is also significantly down,” added Lee. “Our push on productivity, efficiency and cost control has come through in terms of the profit numbers, on a turnover that was down by a couple of percent.”

An image of a BAE Systems engineer using a Renishaw 3D printer.
Renishaw’s ‘Fit for the Future’ cost efficiency drive has enabled it to turn a profit despite declining revenues. Photo via Renishaw.

Renishaw’s H1 2021 financial results 

Renishaw reports its revenue across two main categories: Metrology and Healthcare. The company’s Metrology segment, which generates the vast majority of its income, includes its revenue gained from the sale of advanced measuring equipment, as well as its metal 3D printers. 

During H1 2021, Renishaw’s Metrology division generated £235.6 million in revenue, a 2% fall compared to the £241.5 million reported in H1 2020. Even though the company saw a rise in orders for its machine tooling and encoder lines during the period, it experienced reduced demand for its CMM products, particularly within the aerospace sector. 

Similarly, although Renishaw doesn’t break down its 3D printing income in detail, it did reveal that in H1 2021, it suffered an annual revenue decline of around 40%. The company described the result as “in line with expectations,” after the division incurred one-off costs due to the firm’s “Fit for the Future” efficiency drive, that won’t continue into 2021. 

Contrastingly, Renishaw’s healthcare revenue increased during H1 2021, rising from the £17.8 million reported in H1 2020 to £19.5 million. The revenue growth was accounted for by increased interest in the firm’s neurological and spectroscopy products, technologies that the company has conducted extensive clinical research into over the last year. 

Revenue by Segment H1 2021 (£) H1 2020 (£)Change (%)
Metrology 235.6m241.5m -2
Healthcare Products 19.5m17.8m+10
Total 255.1m259.4m-2

Staying profitable in a turbulent 2020

On the earnings call, Lee emphasized that Renishaw’s business continues to struggle in the EMEA region due to the “challenges of the pandemic” there. In particular, COVID travel restrictions have prevented the firm from carrying out installation visits, while the cancellation of surgeries has stunted the growth potential of its healthcare division. 

However, while H1 2021 was challenging for the firm’s 3D printing segment, it did make notable progress in finding new applications for its technologies. For instance, the company announced a collaboration with the Digital Manufacturing Center (DMC) during H1 2021, that saw it install two RenAM 500Q machines there. 

Elsewhere, Renishaw released the latest version of its CARTO software, and partnered with TEAM INEOS UK to 3D print parts at the Americas World Cup Series. The company also managed to insulate itself from any of Brexit’s potential adverse effects, by expanding its EU-based presence, something that according to Lee was “working well.” 

“We very much prepared last year for a no-deal Brexit,” explained Lee. “We built up safety stocks at our Dublin facility and elsewhere in Europe to make sure that if there are any short-term travel disruptions, we could keep supplying critically to our customers, and that all went very well for us.”

Renishaw's RenAM500 Q 3D printers. Photo via Renishaw.
Renishaw intends to focus on the development of its 500Q system (pictured) in H2 2021. Photo via Renishaw.

Renishaw’s plans for the future

Moving into H2 2021, Renishaw intends to focus on marketing its 500Q system, in particular to those clients seeking to enter high-volume production. Having achieved the necessary cost reductions to stay profitable in H1 2021, the company is now ramping up its related design activities, to develop “new next-generation technologies” in the year ahead. 

The company’s restructuring has also seen it reduce its headcount and travel expenditure, which were key factors in improving its pre-tax profits from £14.3 million to £43.4 million. Renishaw decreased its capital expenditure too, from £28.4 million in H1 2020 to £4.8 million in H1 2021, and it will take this frugal approach into H2 2021. 

“We’ve put in significant infrastructure investments over the last few years for both our sales organization and our manufacturing,” concluded Lee. “So we have the capacity and the sales support network now invested in. Our focus now is very much on getting the most out of those investments.”

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Featured image shows a BAE Systems engineer using a Renishaw 3D printer. Photo via Renishaw.