Profits fall for Castings

Fir he 12 months to the end of March, the Brownhills-based business saw turnover down from £150 million to £139m) with a reduction in profit before exceptional items and income tax from £15.3m to £12.7m

Chairman Brian Cooke said that in the first half of the year Castings saw strong demand from customers, generating a good level of profitability. The second half of the year saw reduced levels of demand from the commercial vehicle sector and output reduced to approximately 70 per cent capacity.

From the third week of March the impact of Covid-19 started to come through.

"As a result of plant closures at the original equipment manufacturers, our demand reduced by approximately 80 per cent and the year end result was negatively affected by approximately £750,000," he explained.

Foundries saw a decrease in output and profitability compared to the previous year.

"We have been working to realise the full productivity improvements from the automation investment at the William Lee site. Whilst some advances were made during the year, we will only start to see the financial benefits of the wider restructuring of the process department when volumes increase.

"We commenced work on upgrading and extending one of the moulding lines at the Brownhills foundry. Once this is complete, during the second half of the current financial year, it will provide greater reliability, efficiency, production flexibility and increased output capacity," said Mr Cooke

The CNC Speedwell business returedn to profitability in the first half of the year, largely as a result of management's continued improvements in the operational efficiency of the business.

"The machining business continues to become more aligned with the customer base of the foundries and was therefore equally impacted by the fall in demand," he added.

A significant proportion of Castings workforce was placed on furlough leave under the Coronavirus Job Retention Scheme.

"It is pleasing to report that output has increased from the lows of April and a number of employees have returned from furlough leave as we plan for the higher demand set out in our customer forward schedules. However, production remains significantly below pre-Covid-19 levels and the continued uncertainty regarding the economic recovery post-lockdown means that it remains incredibly difficult to predict future demand and therefore whether this initial recovery in demand will be maintained through the year," added Mr Cooke.