Castings back to pre-recession levels as turnover rises 74%

WALSALL engineering group Castings has seen a strong improvement in annual profits with business improving to pre-recession levels.

The group said turnover had increased 74% from £60.6m for the year ended March 2010 to £105.4m for the year to March 31, 2011, of which 60% was exported. Profits rose from £9.8m to £15.5m in the same period.

Investors reacted positively to the results with the group’s share price rising favourably.

However, the Brownhills group acknowledged the recovery was from a low base, while performance had been impacted by a rapid rise in raw material costs, which accounted for £5.7m of final turnover.
 
The group said the second half had seen an improving trend and this had continued, to the point where the business is now operating at pre-recession levels and in its machining business, at levels above those in 2008.
 
Chairman Brian Cooke said trade was so encouraging the company was taking on new staff and re-employing a number of the workers it had made redundant at the onset of decline.

“It is sincerely hoped we can enjoy a period of sustained growth in a somewhat uncertain economic outlook.  Our major customers appear to be optimistic about the future and forecast increased volumes,” he said.
 
“We are now operating at the Castings Brownhills site at previous levels of production and at William Lee we are producing at record levels with the new foundry operating at near capacity levels. Overall we still have capacity available for future growth.”

He said the group had overcome costly logistics problems during the year and was now back to on-time deliveries with stocks under control.
 
The CNC Speedwell machining business enjoyed a record year with revenue up 151%, which was aided by new investment and new customers.

Looking ahead, Mr Cooke said the group was now at the stage where it was looking for growth and would be expanding into a new warehouse and manufacturing plant once planning permission was granted.

He said this would improve the logistics operation, help stock control and ease traffic congestion in Brownhills. The estimated cost will be £5m and the project is expected to complete by the end of the year.
 
The group also received a boost with a settlement of £0.86m from the administrators of the UK subsidiaries of the Icelandic banks.  Castings has now recovered a total of £2.06m and it hopes further payments will follow.

Mr Cooke said the performance had enabled the group to recommend an increase in the final dividend to 8.04p per share after two years of no increases. The represents a £4.7m return to shareholders.

In outlook, he said: “Despite various adverse reports, our customers are forecasting stable or increased demands and if these forecasts are converted to sales we will enjoy further growth in the company and our investments in both foundry production and machining capacity will improve returns.”