Renishaw LON: RSW reported higher revenue, profit and margins for fiscal 2026, supported by strong demand for position encoders used in semiconductor equipment and by growth in additive manufacturing.
Revenue rose 14% to £816 million, or 17% at constant exchange rates, while adjusted operating profit increased 36% to £153 million. The company’s adjusted operating margin expanded to 18.7% from 15.7% a year earlier, and earnings per share grew 30%.
Chief Financial Officer John Shipsey said the performance represented progress toward the company’s medium-term targets, including high-single-digit through-cycle revenue growth, a 20% operating-margin threshold, cash conversion above 70%, and return on invested capital above 15%. Renishaw’s operating margin exceeded 21% in the second half of the year, he said.
The board proposed a 5% increase in the regular dividend and a special dividend of £0.70 per share. Renishaw ended the year with £291 million in cash and deposits after net cash increased by £17 million. Shipsey said the special dividend would reduce first-half fiscal 2027 cash flow by £51 million.
Position Measurement Leads Growth
Position Measurement delivered the company’s strongest profit performance. Revenue in the segment climbed 26%, or 29% at constant currency, led by optical encoders for semiconductor equipment and magnetic encoders for automation and robotics. Operating profit rose by more than 50%, while the operating margin increased five percentage points to 27.4%.
Shipsey said laser encoder sales declined for the full year but began recovering in the second half, with the order book growing. The company also secured early production orders for its ASTRiA inductive encoders in aerospace and defense applications.
Management said artificial intelligence-related investment has been a major driver of semiconductor capital spending. The company is increasing capacity for encoders, including investment in machining, electronics manufacturing and automated assembly. Shipsey said fiscal 2027 capital spending on production assets would double, primarily to expand encoder capacity.
That additional capacity has a roughly 12-month lead time and is expected to come fully online by the end of fiscal 2027, according to Shipsey. He added that the investment is intended to increase capacity while also improving manufacturing productivity, acknowledging the cyclical nature of semiconductor demand.
Renishaw said it does not disclose its order book by division, but Shipsey said the order book has continued to grow, particularly in Position Measurement. He cautioned that orders are not necessarily committed and can be difficult to interpret during a period of supply scarcity.
Industrial Metrology and Additive Manufacturing
Industrial Metrology, which accounts for more than half of Renishaw’s business, reported revenue growth of 4%, or 7% at constant currency. Demand for five-axis coordinate measuring machines and Equator gauges increased, while metrology sensor sales were flat as stronger consumer-electronics demand offset weaker sales to European machine builders. The segment’s operating margin remained broadly stable at just over 17%.
Management said the European machine-tool market is showing early signs of recovery outside automotive-related activity. The company said automotive remains difficult, particularly for machine-tool builders and German job shops focused on mould-and-die work for the sector.
Specialised Technologies posted revenue growth of 43%, or 46% at constant currency, driven by additive manufacturing demand from aerospace and defense customers. Spectroscopy sales declined slightly. The segment’s operating margin improved by nearly 18 percentage points to 4.4%, and Shipsey said all product lines in the segment are now profitable.
The company said additive-manufacturing demand contributed materially to a strong fourth quarter, though management described the level of capital-goods orders in the period as unsustainably high. It said activity at the start of fiscal 2027 has remained at roughly the same overall run rate as the fourth quarter, with other divisions offsetting some of the decline in Specialised Technologies activity.
Innovation, Productivity and China
Management said Renishaw continues to invest more than £100 million annually in engineering, spanning current products and longer-term research. Recent product activity includes the Equator X gauging system, MotorSIM software, new metrology sensors and a next-generation laser encoder system for front-end wafer inspection applications.
The company said its new MODUS IM software platform is designed to provide a common programming interface across coordinate measuring machines and machine tools. Management said customer feedback on ease of use has been strong and that it sees potential for artificial intelligence to support programming and user workflows.
ASTRiA, Renishaw’s inductive encoder, has drawn particular interest from defense customers because of its rotational accuracy, durability and ease of installation, management said. The company did not provide a market-size estimate, but said the product could become a significant revenue generator over several years. Shipsey said it is too early for ASTRiA to have a meaningful effect on Position Measurement margins, though he expects margins in certain markets to be “decent.”
In China, management said the market remains strong but has become more competitive, including from domestic encoder suppliers. Renishaw said it competes on performance, capability and price, and is considering China-for-China products and local supply chains for entry-level sensor markets.
Shipsey also outlined a multi-year “One Renishaw” productivity program intended to standardize and globalize processes in manufacturing, sales and back-office operations. The company has paused the broader rollout of its enterprise resource planning system after the U.K. implementation proved difficult. Shipsey said Renishaw will conduct a diagnostic review through the end of the calendar year and that all aspects of the system’s design are under review.
Looking ahead, management said Renishaw expects further strong progress in revenue, profit and operating margin in fiscal 2027, while remaining mindful of cyclicality in its markets.
About Renishaw (LON:RSW)
We are a world leader in measuring and manufacturing systems.
Our products give high accuracy and precision, gathering data to provide customers and end users with traceability and confidence in what they're making. This technology also helps our customers to innovate their products and processes.
We are guided by our purpose: Transforming Tomorrow Together. This means working with our customers to make the products and the materials that are going to be needed for the future.
We believe that our purpose is incredibly relevant in today's environment where the pace of change in technology is faster than ever.
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