Machining group sees profits wiped out as sales tumble
Walsall-based machining group Castings has slipped into the red after sales dropped dramatically for the six months to September 30.
The firm has posted a loss of £630,000 – down from a profit of £7.3m last year, while revenues slid from £73.1m in 2019 to £41.7m this time around.
Output as Castings had been reduced by approximately 80% during the first two months of the period as the commercial vehicle sector, which represents 70% of group revenue, closed production facilities and 80% of the company’s workforce was placed on furlough leave under the Coronavirus Job Retention Scheme. During the following four months, there was a gradual increase in demand from the heavy-truck OEMs such that monthly demand levels were approximately 85% of pre-COVID levels at the end of the period.
The group completed on the sale of the Fradley site for £1.95m (before disposal costs) on 22 September 2020, resulting in a profit of £660,000.
A statement signed off by chairman Brian Cooke said: “The current heavy-truck schedules suggest output returning to pre-COVID levels, albeit there continues to be uncertainty regarding the pandemic. Assuming these levels are realised, the group is well positioned to see the benefits of the productivity improvements in both the foundry and machining businesses.
“The group has been successful in obtaining a number of new projects with our European truck customers that will commence production in 2021/22 and 2022/23. In addition to replacement work, these projects include additional platform volumes and also more value-add product solutions.
“The automation of finishing processes within the foundries is largely complete and the automation investment programme in the machining business will continue in the medium term.
“The group maintains a strong balance sheet with cash levels of £35.2 million; an increase of £1.8 million during the period after the dividend payment of £5.0 million.”
