Pandemic continues to make its presence felt at manufacturer
Carclo Group, which makes tolerance injection moulded plastic parts and aerospace components, is set to report a strong performance for the year, with revenue growth ahead of and underlying profits in line with expectations.
The Wakefield-headquartered firm, which has provided an update on trading for the financial year ended 31 March 2022, says it has continued to invest in capital equipment to support long-term growth, largely financed by an increase in net debt.
It notes the impact of the pandemic continued to be felt throughout the year, less through direct impacts of lockdowns and plant closures, and more through the secondary effects of labour shortages and cost inflation.
Carclo adds: “During the second half, whilst demand has remained robust, the business faced more challenging conditions in terms of recruiting labour in the US as well as cost escalations across raw materials, energy, packaging, freight and other overheads.
“Whilst the impact of raw material cost increases can largely be passed on to customers – albeit with some time lag – the overall impact of these increases reduced margins in the second half particularly in the US operations.
“Price increases are being negotiated with customers and this will continue into FY 2023 to offset the impact of the non-material cost increases.”
Carclo now operates across two divisions – Carclo Technical Plastics (CTP) and Aerospace.
The business says its CTP division has performed well, with demand continuing to grow for medical and diagnostic products. The first half of the year was strong, followed by a second half year performance impacted by cost inflation.
Carclo states its Aerospace division has continued to show resilience, remaining both profitable and cash generative in the year. Order intake remained subdued in the first half but has improved significantly in the second half and in particular in the last quarter of the year.
The company’s outlook explains: “Demand in the Group’s key markets remains strong coming into the new financial year and this underpins continued confidence in strong underlying revenue growth.
“However, the Group is seeing significant headwinds largely due to the continued impact of COVID-19, in particular in our China and India operations.
“In addition, we remain mindful of the general market uncertainty related to the impact of the war in Ukraine.”