Engineering group blames problems at machining division for profit hit
Profits at Walsall engineering group Castings have been hit by problems at its machining division which struggled to meet customer orders leading to a hefty transport bill on top of costs for exiting some projects.
CNC Machining reported a £3.95m loss for the year compared to a £1.52m profit in 2017.
Castings said: “One of the major issues for much of the year has been an inability to meet customer orders in a timely way, which has resulted in extra transport costs in excess of £1.2m. These costs have been necessary to prevent disruption to our customers’ production lines.”
The issues highlighted in the group’s latest accounts filed at Companies House for the year to the end of March 2018 resulted in Castings’ pre-tax profits dropping to £12.1m from £15.9m the year before.
However, the company reported a stronger year for its foundries, which saw an increase in output and improved profitability compared to the previous year, contributing to a 12.2% revenue rise to £133.3m, up from £118.8m.
Chairman Brian Cooke said: “It is very disappointing to report a substantial loss at CNC for the year. I am pleased to be able to report that transport costs are now back down to historic levels.
“We have also carried out a review of the operations of the company and, as a result, identified certain projects that were not suitable for the group. This has cost us a further £1m in write-downs of capital and tooling equipment.
“It will take time before we see the turnaround from the changes being implemented by the new team, including the training of operatives that we have taken on, but we expect the trading results of CNC to improve during the second half of this financial year.”
Commenting on the company’s outlook, Cooke added: “It appears at the present time our order book is sound and schedules are increasing. In particular demand for commercial vehicles is currently strong and it is hoped this trend will continue.”
