Engineering firm Renishaw’s shares have plunged after it lowered its profit expectations, due to dwindling demand in Asia.
The company, which employs 2,800 people in the UK, said adjusted profit before tax for the full year is now expected to be between £117 million and £135 million, compared to a previously guided range of £140 million to £160 million.
Shares in Renishaw dropped 12.3% in early trading on Thursday.
Demand from Asian customers for the company’s encoders – measurement devices – has dwindled in recent months.
Meanwhile demand from large consumer electronics manufacturers has also slowed.
After flagging this at its half-year results, Renishaw has now said it expects these conditions to continue through the remainder of the financial year.
Annual revenue is expected to be in the range of £595 million and £620 million.
The board said it remained confident on the prospects of the group, despite current economic uncertainties.
Russ Mould, investment director at AJ Bell, said: “Renishaw does a lot of things you would want a company to do, most notably investing heavily in research and development to maintain its position at the forefront of high-end precision measurement equipment.
“The business is also diversified across several sectors, but this does not mean it is immune to fluctuations in the wider economy.
“Today’s warning will raise fears over the prospects of the wider engineering sector given Renishaw is probably better positioned than most of its peer group, with a level of expertise which sets up barriers to any potential competitive threats.”
Renishaw was praised by Chancellor Philip Hammond as a “British success story” when he visited its Gloucestershire headquarters with the Prime Minister in 2016.
Former Chancellor George Osborne also visited a Renishaw assembly facility earlier in the same year as part of the campaign for the UK to remain in the European Union.