Foundry firm endures tough day on the markets after disappointing results

Castings

A Staffordshire foundry group endured a tough day on the markets after revealing a decline in full year revenue and profits.

Shares in Brownhills-based Castings closed down almost 4% after a lacklustre response to its full year performance.

Group revenues decreased by 10.3% to £118.8m (2016: £132.4m), of which 72% was exported (2016: 67%). The ending of a major automotive supply contract at the end of the previous year impacted sales.

The revenue from the group’s foundry operations to external customers decreased 2.5% to £111.8m (2016: £114.7m) with the dispatch weight of castings to third-party customers decreasing 9.2% to 47,200 tonnes (2016: 52,000 tonnes).

Revenue from the machining operation to external customers decreased by 60.6% during the year to £7m (2016: £17.7m).

Group operating profit for the year was £15.7m (2016: £19.5m), which represents a return on sales of 13.2% (2016: 14.7%). Pre-tax profit decreased to £15.9m from £19.7m.

The foundry operations returned a small profit of £14.5m (2016: £14.7m). This represents an increase in segmental profit as a percentage of total segment sales to 11.3% from 10.9% in 2016.

The segmental profit of the machining operation was £1.5m (2016: £4.7m), being 6.5% (2016: 14.2%) of total segment sales.

Despite the performance, chairman Brian Cooke said it appeared customer demands were remaining steady.

“The situation concerning Brexit is creating a certain amount of concern in the manufacturing sector and the sooner the Government negotiates a deal to remove this uncertainty the better it will be for planning the future,” he said.

“The company is putting every effort into developing new work with both existing and new customers. Our focus is on core business that can be produced and machined within the group. At the same time we are continuing to invest in technology to improve productivity and profitability.”

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