Renishaw has reported a 97 per cent drop in annual pre-tax profits amid a warning of "very challenging market conditions".

The specialist engineering firm, based near Wotton-under-Edge, saw pre-tax profits fall from £109.9million a year ago to £3.2million for the 12 months up to June 30.

Restructuring costs, the loss in value of financial instruments and financial expenses were behind the fall with Renishaw having forecast a drop to £4million last month.

Pre-tax profit fell by 53 per cent to £48.6million while annual revenue dropped 11 per cent to £510.2million, in line with predictions.

Chief executive William Lee said: "Given the uncertain macroeconomic backdrop, including the pandemic and the risks posed by reduced freedom of global trade, we expect very challenging market conditions, particularly in the automotive and aerospace sectors.

"We continue to invest in the development of new products and applications, along with targeted investment in production, and sales and marketing facilities around the world."

Revenue fell in all regions with metrology down 11 per cent to £475.2million after being hit by the impact of the coronavirus pandemic, lower demand for machine tools and trade tensions between the US and China.

Delays in orders and postponements of elective surgery due to the pandemic saw healthcare revenue fall by 15 per cent to £35million.

Renishaw had already announced it would not be paying a final dividend for the year, a decision which will be review in 2021.

The company has announced a collaboration with UK start-up Additive Automations on a project using collaborative robots in the post-processing of metal additive manufacturing.

Director of AM sales Bryan Austin said: "Improvements in post-processing could bring AM to the forefront of new applications in medical and aerospace applications.

"An automated manufacturing process could make AM adoption more appealing to manufacturers operating large volume production lines."