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Investing.com -- Renishaw PLC (LON:RSW) shares fell 4.3% on Thursday after the manufacturing technologies provider reported first quarter revenue below analyst expectations, with significant weakness in European markets offsetting growth in other regions.
The company posted a 2.8% increase in constant currency revenue for the quarter ended September 30, but this fell short of the 4.6% consensus forecast for fiscal 2026.
Revenue declined 1.8% at actual exchange rates to £170.8 million compared to £173.9 million in the same period last year. The company noted that 1.2% of the constant currency growth came from surcharges implemented to offset tariff duties in the Americas, suggesting underlying organic growth was modest at best.
EMEA region performance was particularly concerning, with revenue plunging 20.5% at constant currency. The company attributed this to weak demand for Industrial Metrology sensors from machine tool builders and lower sales of laser encoders. A planned ERP system implementation also impacted September sales, though Renishaw expects to recover this in the second quarter.
"Despite the continued global uncertainty, the structural drivers that underpin our markets are presenting growth opportunities across our businesses," said Renishaw in its trading update, maintaining expectations for "steady revenue growth" in the year ahead.
The company completed its previously announced £20 million operating cost reduction program during the quarter, reducing headcount by 350 employees or 6.5% compared to the end of fiscal 2025.
More positively, Renishaw reported strengthening order books in the Americas and APAC regions, which grew 11.2% and 14.7% respectively at constant currency. The company also highlighted positive reception to new product launches, including the Equator-X dual method shopfloor gauge and MODUS IM Equator metrology software.
Renishaw continues to progress productivity initiatives aimed at improving efficiency and returns in line with its medium-term targets, which include operating margins above 20%.