12th Nov 2021 14:57
(Alliance News) - Castings PLC on Friday said first half revenue jumped, though the company noted it is being hurt by supply chain disruption, with "labour recruitment difficulties" also hitting its machining business.
The iron castings and machining firm said revenue for the six months to September 30 increased 67% year-on-year to GBP69.7 million, from GBP41.7 million.
Castings swung to a pretax profit of GBP5.4 million, from a GBP627,000 loss a year earlier.
Castings declared an interim dividend of 3.66 pence, up 2.5% from 3.57p a year earlier.
Despite the improved earnings, the West Midlands, England-based firm said that it has been hit by "supply chain disruption". These have mostly impacted its commercial vehicle customers, which represent 70% of group revenue.
"Whilst forward demand schedules from our customers have remained high throughout the period, the conversion rate to actual sales has been significantly below what we would normally expect. In an attempt to cut across these fluctuations and remain efficient, higher production levels were retained and inventory levels increased," Castings cautioned.
It also said it was "hampered" by recruitment difficulty, forcing it to close its machining business for a week at the end of September.
Looking ahead, Castings said: "The long term demand schedules continue to reflect the higher build rates that the heavy truck original equipment manufacturers require to satisfy their order books. However, the medium term call-off schedules have significantly reduced, reflecting the supply chain restrictions being experienced by our customers.
"The group is well positioned to see the benefits of the productivity improvements in both the foundry and machining businesses when supply chain restrictions do ease."
Going forward, Castings said it will invest in automating its finishing and melting processes. The investment in automation at its machining arm will "continue in the medium term".
Shares in the company were 1.3% higher at 377.00 pence each in London on Friday afternoon.
By Abby Amoakuh; [email protected]
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