Profit rises at Castings as firm benefits from lagged Covid impacts
Iron casting and machining group Castings benefited from the lingering impact of the pandemic on supply chains in its latest set of financial results.
Pretax profit increased to £21.3m in the year ending in March, up from £16.7m last year. Revenue meanwhile rose to £224m from just over £200m.
Chair Alec Jones noted that demand had been “very strong” during the year, particularly in the first half as customers continued to struggle with supply chain snarl-ups caused by Covid.
“Our heavy truck customers (approximately 80 per cent of revenue) increased their build rates to satisfy an unprecedented level of demand, which was caused in part by the backlogs associated with the Covid period and the subsequent supply constraint issues that were well documented,” he said.
Jones said that the backlog had been cleared with the firm now seeing reduced levels of demand into the new financial year. “We are currently operating at a level approximately 20 per cent below the highest point in 2023/24,” he said.
The firm noted that it had seen relatively high input prices during the year following the end of its fixed-price contract in September 2022. However, this additional cost was surcharged to customers and did not hit group profit.
Current levels of demand are expected to continue in the short term, with the potential for a slight increase in the autumn.
“We will continue to develop opportunities with existing customers in areas such as the electrification of lighter trucks and build relationships in other markets such as wind energy, agriculture and in the US,” he said.
On the back of its results, Castings recommended a dividend of 14.19p per share, giving a total dividend of 18.32p per share.
The firm said it would also pay a supplementary dividend of 7p per share. It confirmed this would not compromise “our commitment to invest in market-leading technologies to maintain our competitive advantage”.