Forgemasters narrows losses after major turnaround
Historic company Sheffield Forgemasters has turned its performance around in a breakthrough year, narrowing losses by more than £6m.
Last year it posted pre-tax losses of more than £7.6m, narrowed from the year before when the firm posted £10.6m in losses.
Now, Forgemasters has reported that pre-tax losses have narrowed by £6.7m to £900,000.
Though its results have not yet landed at Companies House, the company said that revenues were in line with those of last year, at around £73m. Revenues reached £72.8m last year.
Efficiency measures, continued investment and an aggressive drive towards new markets were behind the turnaround, said the company.
It has also undertaken a major restructure, and invested in its facilities during the year, including a £6.5m investment in machining centres to reduce production bottlenecks. The Sheffield Local Enterprise Development Fund contributed 10% to the capital cost. Net debt increased as a result of the investment programme, to £7.9m.
Tony Pedder, chairman at Sheffield Forgemasters International Ltd, said:“Despite a pre-tax loss, we accrued exceptional restructuring costs of £1.7m and with that non-recurring expense taken into account – we posted a modest post-tax operating profit, which is a major step in our recovery programme from 2015.
“We are addressing all aspects of governance, we have a new chief financial officer, James Tate, and I am pleased to welcome three new non-executive directors to the board. Janice Munday, Jon Bolton and David Duggins who bring a breadth of experience and will be valuable additions to our team as we go forward.
“There are a range of issues which we are addressing in our five-year turnaround plan and the executive team are pursuing these with considerable diligence. In particular we have focused ongoing efforts on cost reduction, efficiency and margin enhancement.”
Graham Honeyman, chief executive at Sheffield Forgemasters, said: “The financial results for 2016 demonstrate that our efforts to turn the business around have delivered and we are clearly heading in the right direction.
“We are pleased to report that the business continues to have a firm financial footing having successfully secured a new two-year and three-month £45m credit facility from our long-standing financier, Wells Fargo Capital Finance (UK) Limited.
“The cost cutting measures which have taken place over the last eighteen months together with increased gross margin have helped to secure an operating profit sooner than anticipated.
“Depreciation of the sterling currency, which resulted from the Brexit decision in June 2016, has also had a positive impact on the company’s results due to the proportion of sales made outside of the UK.
“And continuous improvement initiatives involving lean manufacturing techniques together with fundamental changes to the organisational structure are bringing significant operational efficiencies. The program of organisational change is set to continue and we expect further improvements to be made over the coming years.”
Forgemasters employs 650 staff across its 64-acre Brightside Lane site and serves industries including defence, nuclear power, materials processing, offshore oil and gas and power generation.
