Renishaw Rides the AI Chip Boom to Record Results

THE GIST

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Renishaw has landed in one of the more profitable corners of the AI investment boom, supplying the ultra-precise measurement technology needed to manufacture increasingly complicated semiconductors.

Record sales, stronger margins and a growing order book pushed full-year results ahead of expectations, while management says the new financial year has started strongly as chip-equipment demand continues to accelerate.

WHAT HAPPENED

Renishaw shares rose around 3% after the Gloucestershire-based engineering group reported record results for the year to June and said it expects further strong progress in revenue, profit and operating margin.

Revenue increased 14% to £815.8 million (about $1.1 billion) and rose 17% at constant currencies, slightly ahead of the roughly £810 million analysts had expected.

Adjusted operating profit climbed 36% to £152.9 million, lifting the margin to 18.7% from 15.7%, while adjusted pretax profit rose 32% to a record £168 million, beating consensus of about £165 million.

Adjusted earnings per share increased 30% to 179.5p, also slightly ahead of expectations, while statutory pretax profit rose 27% to £150 million despite £18 million of redundancy and other one-off costs.

Momentum accelerated as the year progressed. Fourth-quarter revenue reached a record £244.2 million, up 28% year on year, while the order book continued to grow.

Position Measurement was the standout division, with revenue jumping 26% to £260.9 million and adjusted operating profit increasing 53% to £71.5 million. Its margin expanded to 27.4% from 22.5%, driven largely by demand for optical encoders used in semiconductor manufacturing equipment.

Specialised Technologies grew even faster, with revenue up 43% to £107.5 million as additive-manufacturing systems benefited from aerospace and defense demand. The division swung from a £9.9 million adjusted operating loss to a £4.7 million profit.

Industrial Metrology, still the largest part of the group, grew more slowly at 4% as weakness in some traditional industrial markets offset demand for newer metrology systems and software.

The balance sheet remained strong, with cash and deposits rising to £291 million. Renishaw increased its regular dividend by 5% to 82p per share and added a special 70p interim dividend.

WHY IT MATTERS

Renishaw's results show how far the AI boom reaches beyond the companies designing chips or building data centers.