The share price of Castings (CGS) pulled back after operating profit fell by a quarter at the half-year mark. The underlying reason for the contraction - the loss of a major contract at the group's CNC Speedwell machining business - had been flagged earlier in the year but overall trading activity was subdued due to "a softening in demand" from Castings' customers.
External revenue for the key foundry segment was down slightly from the comparable period in 2015, as lower sales volumes were only partially offset by improved sales of more complex - and more profitable - machined parts. Management continues to review foundry techniques in order to boost productivity. However, the loss of the Speedwell contract meant that revenue at the machining unit fell by 63 per cent.
It was also confirmed that chief executive David Gawthorpe plans to retire at the end of the group's current financial year. In line with succession planning, Adam Vicary, currently managing director of the Castings Brownhills unit, will take over the reins on Mr Gawthorpe's departure.
Arden Partners expects cash profit of £23.7m for the March 2017 year-end, leading to EPS of 31.2p, rising to £25.9m and 35.7p the following year.
| CASTINGS (CGS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 395p | MARKET VALUE: | £172m | |
| TOUCH: | 390-395p | 12-MONTH HIGH: | 481p | LOW: 390p |
| DIVIDEND YIELD: | 3.5% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 271p | NET CASH: | £13.3m | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 65.0 | 9.5 | 17.4 | 3.38 |
| 2016 | 57.9 | 7.1 | 13.0 | 3.38 |
| % change | -11 | -26 | -26 | - |
Ex-div: 24 Nov Payment: 3 Jan | ||||
