Renishaw Share Discussion Threads

[electronica] 14/10/2011 08:17

redart

Thanks for the excellent precis of the AGM. I wanted to get back to Wooton early for the event but got stuck in London. You've eased my guilt.

Shanklin

As an (almost) Wooton resident I'm certain that the local council will do nothing to upset the area's largest employer & a great supporter of local schools etc.

[shanklin] 14/10/2011 08:00

Consultation re proposed supermarket.

[alter ego] 14/10/2011 07:52

Excellent feedback thanks

[shanklin] 14/10/2011 07:48

Thank you Red

[redartbmud] 14/10/2011 07:43

Shanklin

On medical it was stated that resources had been diverted from medical, as returns were disappointing, but when drawn by questions Sir David McMurtry was very non committal on any further action giong forward.
You have to remember that the whole company phliosophy is based on long term thinking.
The technology crosses over into medical because of the prcision element, but the question that I would have is one of size of market. Is it big enough to warrant RSW's level of investment, and how will it be marketed successfully to that market.
My guess is that losses will be managed more carefully, but will continue in the medium term. I doubt that it is currently a saleable business, more a Univerity style R&d operation.
Certainly dentists have not bought in in any great numbers to date in that sphere of medical.

It was said that the South Wales site could potentially be re-developed in the near future.
The planning was to establish a small production unit there over the comming months, as with all previuos expansions.
Whenever RSW has bought new premises it has always been on the basis that they are bigger than needed, allowing for growth. The spec in the production areas is very high from necessity. They have always managed to grow into full use without too many problems.
Talks will soon commence on how the site can be re-developed, with potentially tennants on parts of it.

Closer to home expansion plans could see a new build on the New Mills site, with the small unit at Charfield turned into a supermarket. Plans are on the table with the council.
Presumably this is therefore self-funding, but the question was not asked.

Not sure on product line that has seen downturn.

Positive was the new product EQUATOR that is a flexible gauging system that will fill a gap in the market. It can operate in tough environments as a much cheaper option to kit currenly available in the market place.

The MMT business, now fully owned is beginning to make a bigger contribution.

On the labour front all employees are trained to a high level. Certain jobs are by nature more menial in content, but nevertheless quality is paramount. It takes time to develop them. In South wales some former Bosch employees have relevant training and skills. They will prove beneficial.
538 of the new staff were from businesses taken over in the year, and not recruited off the street.

Hope this helps.

As always Do Your Own Research.

Best of luck
Red

[shanklin] 14/10/2011 05:55

redartbmund

Thank you for your post. Particularly interested in your point 4.

Yesterday's rns talks about diverting some resources away from the medical side and having "refocused part of the activities to a smaller number of projects". Presumably some research areas have been viewed as too blue-sky and/or jam tomorrow to be further pursued at present.

How do you see this panning out? Did any of the management team suggest that, unless it delivers fairly soon, this side of the business is on borrowed time? Just eliminating the losses here would be very helpful in the short-term, so long as it doesn't jeopardise what could be some long-term profitable growth paths.

Would this part of the business potentially be put up for sale?

P.S. On a separate topic, was anything side about which product line had surprisingly weak sales, why this was and what they plan to do about it?

[shanklin] 14/10/2011 05:47

BTW, the main points new to me in the FT article were:
- RSW have taken on an additional £24m of annual (primarily) staff costs
- Broker earnings downgrades after yesterday were at most 15%

[aston girl] 13/10/2011 21:31

An excellent post Redartbmud thank you for sharing
For those of us who are geographically remote from all capital cities, your thoughts on the AGM are much appreciated. Keep up the posts, AG

[redartbmud] 13/10/2011 21:05

Long term holder & as such attended AGM today.
Room full of the "County Set" many of whom go for the lunch, I suspect.

IMS is no doubt a profits warning but one needs to also understand the philosophy by which the company is run.

It is a world leader in its field and does so by keeping one step ahead of the competition. This requires heavy annual investment in R&D.
The company takes a long view on its activities and is therefore over prone to corrections.
New products take years before they enter into production and old products retain legs by up-grading.

At present:
1. It was never likely to maintain the momentum of 2010/11, with huge jump in turnover and profit.
2. For the present it has invested in new premises at the wrong time in the economic cycle, but on VERY beneficial terms.
3. There has been too much zeal in recruitment of personnel, adding to the cost base.
4. The foray into the medical world appears to be an indulgence, with little likelihood of ever generating a profit, so needs to be looked at through a microscope.
5. Historically order books have been very thin and this does not help in accurate forecasting.
6. It does not "cosy up" to the city boys and give them an endless supply of data on a regular basis. This is something that goes against the business.

Having said all of that the share price was heading towards £20 not so long ago, so is £8.60 or so fair value?

Markets are fickle and I do not have the answer.

I do know that I keep the faith and will remain a long term holder, though perhaps it is time for some new blood in the executive team.

[shanklin] 13/10/2011 16:43

Worth a read.

[shanklin] 13/10/2011 16:29

Does anybody have a house broker note on RSW from after the FY results?

Any help much appreciated.

[redips2] 13/10/2011 14:45

Goodness me----shocking drop today, I will wait and see how this pans out.

[maksud] 13/10/2011 14:45

where is this post from today.

[nasprey] 13/10/2011 14:13

Ha, oops! My bad sorry guys!

That'll teach me to skim! I meant to quote a post from today!

IGNORE ME

[maksud] 13/10/2011 14:11

where did u dig that out of nasprey. that is from two years ago .

[shanklin] 13/10/2011 13:47

nasprey

Very helpful... lol

[nasprey] 13/10/2011 13:37

This is painful for my Long SB...Ouch

[shanklin] 13/10/2011 12:39

Mas

I do have some RSW shares.

With sales significantly up, but staff numbers ramped up hugely, today looks as much self-inflicted as caused by what, in recent months, has been a very tricky global economy. So, as samenic states, lets see RSW adjust to the current trading reality

P.S. I also wonder how much management targets may differ from broker expectations both in terms of sales and costs.

[samenic] 13/10/2011 12:20

Not so sure with this Company,they have a track record of adjusting fairly sharply to trading conditions,and to be fair the share price has already halved in anticipation of a slowdown, in line with the downturn that seems to have occurred.Regarding issues of far eastern staff haven't realised that........

[honiton] 13/10/2011 12:04

Avoid. Always sell on lst profit warning. They do have a tendency to come in 3s.

[goofball25] 13/10/2011 11:39

Taken a small loss here as recently went in. MY fear was of some sort of slowdown which was confirmed today. I do like RSW for the longterm though current climate not favouring companies such as RSW. one to watch still and will be back in for sure

[rogerrail] 13/10/2011 11:32

Whilst short term profitability has taken a hit due largely to an increase in staff, revenue is still growing. My impression is that they have a problem sustaining sales growth in the far east where they have not been able to recruit customer facing staff (applicatitions/sales) to support growth and this is something they are trying to correct , and when they do margins should return to previous levels

[gswredland] 13/10/2011 11:30

Umm chart looking a bit ugly but keen to get in at some point..

[edwardt] 13/10/2011 11:17

whoops - a profit warning?

[masurenguy] 13/10/2011 11:01

Are you invested here Shanklin ?
I recently added this to my watchlist but I'm still monitoring it from the sidelines.