(Reuters) - Renishaw Plc on Tuesday cut its annual profit forecast for the second time in less than two months, as customer demand remained weak, sending shares in the British engineering group to a two-year low.
The company had previously cut its full-year profit forecast in March, citing weak sales in Asia and softness in demand from consumer electronics makers.
Shares of the FTSE-250 company were 6.6% lower at 3,860 pence at 0734 GMT. The stock lost nearly 18% of its value in 2018.
Renishaw, which has a market capitalisation of 2.72 billion pounds, makes precision measurement equipment used in products ranging from jet engines and smartphones to medical equipment and satellites through its metrology business. The company had warned in January that this business, which accounts for the bulk of the group’s sales, was facing weak demand.
Renishaw said it now expected to report annual adjusted profit before tax of between 105 million pounds and 120 million pounds. Before Tuesday’s announcement, analysts on average were expecting a full-year profit of 132.6 million pounds, according to Refinitiv IBES.
The company did not specify what prompted its latest forecast cut, but said it was “based on recent order trends and customer feedback.”
Peel Hunt analysts said they assumed the weakness was still stemming from Asia.
“These recent profit warnings are a reminder that the company is prone to surprises. Balancing that, however, is the fact that they invest in the business in spite of short term trading difficulties, and that strategy is supported by a very strong balance sheet,” the analysts said.
In the nine months ended March 31, sales from Renishaw’s metrology business fell 0.5%, while double-digit sales growth in its healthcare business was not enough to boost overall group sales significantly.
Revenue from continuing operations for the company, which also provides products and services for dentistry and brain surgery, rose 0.3%.
Renishaw, founded in 1973, has been hit by weak sales in Asia, including Australasia, where the company made nearly half of its revenue in 2018. Its metrology business accounted for more than 90% of total sales.
Renishaw also trimmed its full-year revenue forecast to a range of 580 million pounds to 600 million pounds, lower than analysts’ estimate of 614.3 million pounds.
In March, the company cut its profit forecast to between 117 million pounds and 135 million pounds and total revenue expectation to a range of 595 million pounds to 620 million pounds.
Reporting by Pushkala Aripaka in Bengaluru; Editing by Shounak Dasgupta and Jane Merriman