Castings P.L.C. Reports Significant Profit Decline in Annual Results
Why we think this is bad
The financial performance of Castings P.L.C. has deteriorated significantly. Operating profit plummeted by 76%, with revenue falling 21%. The company is facing multiple challenges including reduced demand from key customers, margin pressure from increased electricity costs, and a substantial decrease in EPS. While there's mention of some recovery in the final quarter and potential improvements in autumn, the overall outlook remains challenging with continued lower demand levels expected in the short-term. The new Castings Ductile business is currently loss-making, adding to the company's struggles. Despite maintaining dividend levels, the significant decline in profitability and cash position raises concerns about the company's near-term prospects.
Key Points
- Revenue decreased by 21% to £177.0 million
- Operating profit fell by 76% to £4.8 million
- EPS decreased by 75% to 9.60 pence
- Cash position reduced from £32.5 million to £15.6 million
- Final dividend maintained at 14.19 pence per share
- New foundry production line nearing completion
- Castings Ductile business currently loss-making
- Lower demand levels expected to continue in short-term
- Some improvements anticipated in autumn
- Challenges from high energy prices and increased national insurance costs
Summary
Castings P.L.C. has reported a challenging year with significant declines in both revenue and profitability. Revenue decreased by 21% to £177.0 million, while operating profit fell by 76% to £4.8 million. The company faced reduced demand from its key heavy truck customers, which make up over 75% of group revenue. Margins were under pressure due to lower volumes and increased electricity costs. Despite these challenges, the company maintained its dividend, recommending a final dividend of 14.19 pence per share. The outlook remains uncertain, with lower demand levels expected to continue in the short-term, although some improvements are anticipated in the autumn. The company is investing in a new foundry production line, which is expected to be completed later in the summer, potentially providing additional capacity and opportunities in new market areas.