Castings braced for one-off costs after completing business review

Castings

Brownhills-based Castings has warned it is likely to incur a one-off cost of almost £3.5m following a review of the business.

Following a change of management at the business, a review into its machining operations has been now been completed, resulting in a decision to exit a number of projects deemed ‘not suitable’ for the group.

The total cost of exiting these projects is £1.3m which comprises write-downs of specific capital and tooling equipment and exiting contract commitments to purchase equipment.

In a trading update, the firm said that in addition to these project specific items, the continued disruption in supply to the group had resulted in higher than previously anticipated costs, particularly in relation to excessive transport, to ensure customer schedules are met.

“The total financial impact in 2017/18 of the reorganisation of the machining business is expected to be a non-recurring cost of £3.4m, including £1.2m of excessive transport costs,” it said.

“After taking into account these costs, the directors expect the group profit for the year to be in the range of £12.5m – £13.5m, with positive cash flows being generated.”

Overall, it said the performance of the foundry businesses continued to be in line with market expectations supported by steady demand from its commercial vehicle customer base.

In October, the group’s shares took a hit when it announced the sudden departure of one of its managing directors.

Mark Lewis, head of the group’s truck and automotive components business, CNC Speedwell, left the business on October 20. No reason was given for his departure.

In today’s update, the group said that Steve Barwell had now been appointed General Manager and Director of CNC Speedwell after filling in on an interim basis.

Two further additions to the management team have also been recruited and will join the business by the end of March 2018.

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