No sooner had I completed an article for the latest ShareSoc newsletter on the wisdom of fund manager Harry Nimmo, with whom I had discussed Renishaw at the Standard Life UK Smaller Companies AGM, than moments later the former company issued a profit warning.
Yes Renishaw issued an Interim Management Statement this morning which indicated revenue for the 3 months ending 30th September would be down from £92.2m to £75.2m compared with the prior year. The Far East, specifically China, was particularly badly hit with a 40% revenue reduction. The share price promptly dropped about 10% to 1530p, but it has been falling in the last few weeks already from a high of 1880p. Profit before tax for the quarter was down from £27.7m to £10.6m which bodes ill for the full year results, and there were no countervailing positive comments about the expectations for the rest of the year. If nothing changes, it would appear that they are very unlikely to be anywhere near analysts forecasts for the year.
And what did Mr Nimmo have to say when I asked him why he had exited Renishaw – simply that he was concerned about their reliance on China. I responded that I had also been selling because the share price had become too high, i.e. was losing touch with reality (Renishaw is a favourite of private investors and the share price seems to cycle between depression and over-optimism).
Now ShareSoc Members who read our AGM reports might have anticipated the problem at Renishaw because our AGM Report on Standard Life UK Smaller Companies AGM was published over a week ago. As I have said before, it also demonstrates the wisdom of attending AGMs.
I wish I had been able to go to the Renishaw AGM which was also today, and see what the attendees reaction to today’s announcement was (which came mid morning somewhat unusually, so they would have been in for a surprise). Did the company want to give them the bad news personally, or before everyone else got it?