It was always going to be a tough call to top previous year's record turnover and profits, but industrial engineer Castings (CGS) still managed to deliver its second best performance ever. And, while customer orders were down, there was a distinct improvement in the final few months of the period. Management believes that trend is continuing into the new financial year, prompting analysts at Arden Partners to upgrade their current year adjusted pre-tax profits by 25 per cent to £20.3m, giving EPS of 36p (up from £19m and 33.6p in 2013).
The overall performance was underpinned by a 32 per cent rise in revenue from CNC Speedwell, the machining business, although some of the contracts taken on were lower-margin third-party work. But, since the March year-end, there has been a significant improvement in the heavy truck sector, although much of this demand may be driven by new European emissions legislation being introduced at the end of 2013. The worry is that demand may tail off after this.
In the 12-month period, the total weight of castings dispatched to customers fell by 4,500 tonnes to 52,700 tonnes, of which around two-thirds was exported. However, the company is well placed to take advantage of any upturn, with earlier investment in a new operating warehouse leaving the business with 20 per cent spare capacity. Around £5.75m was invested on new products and quality enhancements.
| CASTINGS (CGS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 375p | MARKET VALUE: | £162m | |
| TOUCH: | 366-378p | 12-MONTH HIGH: | 375p | LOW: 275p |
| DIVIDEND YIELD: | 3.3% | PE RATIO: | 11 | |
| NET ASSET VALUE: | 234p | NET CASH: | £18.7m | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 85 | 3.6 | 1.4 | 10.0 |
| 2010 | 61 | 9.8 | 17.5 | 10.0 |
| 2011 | 105 | 15.5 | 26.7 | 10.8 |
| 2012 | 126 | 23.1 | 40.3 | 11.8 |
| 2013 | 122 | 19.2 | 33.9 | 12.3 |
| % change | -3 | -17 | -16 | +5 |
Ex-div: 10 Jul Payment: 16 Aug | ||||
