Castings PLC Warns of Substantially Lower Profits
Why we think this is bad
The trading update from Castings PLC indicates that the company's performance is expected to be substantially below market expectations for the current financial year. This is due to a combination of factors, including a drop in underlying demand for heavy trucks (75% of group revenue), increased electricity costs, and start-up costs and trading losses associated with a new business. While the balance sheet remains strong, the overall outlook for the company's profitability and revenue growth is negative.
Key Points
- Underlying demand for heavy trucks (75% of group revenue) down 20% year-on-year
- Company's result expected to be substantially below market expectations
- Increased electricity costs and start-up costs for new business impacted profitability
- Balance sheet remains strong despite capital investment and dividend distributions
- Major customers reporting increasing sales orders, expected to positively impact Castings' sales volumes
Summary
Castings PLC, a leading iron casting and machining group, has issued a trading update for the year ending 31 March 2025. The company reports that underlying demand for heavy trucks (75% of group revenue) was down 20% on the previous year, and that the company's result will be substantially below market expectations in the current year. This is due to a combination of factors, including increased electricity costs and start-up costs and trading losses associated with a new business. However, the balance sheet remains strong, and the company's major customers have recently reported increasing sales orders, which are expected to positively impact Castings' sales volumes early in the next financial year.