Weak euro slashes Chamberlin profits
The impact of the weak euro and tougher trading conditions have hit half-year profits at Walsall engineering group Chamberlin, slashing them by threequarters.
As a result, its full year profits will also be down.
But the company says new contracts won by its Walsall foundry, to make complex castings for diesel car engines, will help get profits back on track next year.
As well as its Chamberlin & Hill site in Chuckery Road the company also has foundries in Leicester and Scunthorpe and engineering sites at Cannock and in Birmingham, employing around 400 people altogether.
Over the six months to the end of September revenues at the group fell £3 million to £18m, due to the weakness of the euro compared to sterling and lower demand from the steel, oil & gas and mining sectors.
Underlying pre-tax profit slumped to £100,000 from £400,000 a year ago, as the company took a £600,000 hit from the weak euro.
But the company has gone ahead with a £700,000 investment to support the automotive contract win at Walsall, which is due to start production next year.
Chamberlin chairman Keith Butler-Wheelhouse said: "Results have been impacted by both the weak euro and a slowdown in some of our core markets and therefore, despite the continued drive for efficiency, half year profits are behind the same period last year.
"Looking ahead, given the current tough trading environment, the board expects underlying profitability for the current financial year to be below the £0.8m achieved in the prior financial year.
"However, we anticipate the profit outlook for the next financial year to March 31, 2017, to recover, with the major contract wins at Walsall expected to enter into production in 2016. The measures we have taken to achieve cost efficiencies and improve processes also leave the group better positioned for profitable revenue growth."
The Walsall foundry makes small complex castings and will be making turbocharger bearing housings for diesel engines in passenger cars from next year, with volume production ramping up in 2017.
Meanwhile the slowdown at Chamberlin's Scunthorpe and Leicester foundries has seen the company cutting back on the cost base. Revenue was also down at its emergency exit company Exidor at Cannock and its lighting and control equipment arm Petrel, largely due to a downturn in demand from Petrel's oil and gas customers. Operating profit across the two firms was up, however, due to cost control efforts.
