Inflation and supply costs see manufacturer’s profits dip
Operating profits are down at Ossett-based manufacturer Carclo, but in line with board expectations, the firm said in a trading update to the London Stock Exchange this morning.
Group sales are marginally ahead of board expectations.
The firm, which primarily makes aerospace components and injection moulded plastic parts, said demand remained strong, particularly in the aerospace sector which saw high order intake in the six months to March, and ‘significant’ sales growth.
Margins were lower in life sciences because of inflationary and supply chain costs, as well as the cost of introducing new products. The sector delivered good revenue growth despite delays to planned increases in output volumes in two product lines. Margins were lower, however, and a strengthened management team would focus on improving operational efficiency.
Underlying operating profit for the Group is marginally below the prior year but in line with the Board’s expectation. Net debt increased in the half year largely driven by higher working capital and investment in capital equipment to support future growth.
The inflation and supply chain challenges experienced in the first half are expected to continue through the remainder of the financial year. Our initiatives to further enhance operational efficiency and to offset inflationary price increases are key focus areas for the second half. Increases in borrowing costs are expected in the second half driven by increases in both the level of debt and interest rates.
Carclo plans to announce its interim results for the six months to the end of September in November.
