As its operating profit dipped by a tenth to £12.5m, Castings’ (CGS) chairman Brian Cooke described the 12 months to 31 March as “a year of three parts”. In the first half, the iron castings and machining group saw higher revenue from its foundry operations and a return to profit at CNC Speedwell. But this momentum reversed in the second half of the year amid lower demand from the commercial vehicles sector – output dropped to 70 per cent of capacity. Covid-19 then reared its head in the third week of March as original equipment manufacturers closed their plants. With demand plunging by 80 per cent, this knocked £0.75m off of full year revenue.
The group has been increasing output since the year-end, with customers’ forward schedules suggesting orders will pick up. But production is still “significantly below” pre-pandemic levels and Castings says it is unclear to what extent demand will recover this year.
Capital expenditure increased by 55 per cent last year, to £8.2m, as the group invests in increasing productivity and automating manufacturing processes. But this weighed on margins, with the foundry operating profit margin contracting by 1.3 percentage points to 8.9 per cent. The benefit of the upgrades will only start to show through when volumes ramp up.
Despite, the turmoil, the group has raised its dividend. With no borrowings and net cash generated from operations improving by almost 50 per cent to £23m, the group ended the year with £33m of cash to hand.
| CASTINGS (CGS) | ||||
| ORD PRICE: | 376p | MARKET VALUE: | £ 164m | |
| TOUCH: | 374-377p | 12-MONTH HIGH: | 455p | LOW: 274p |
| DIVIDEND YIELD: | 4.0% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 302p | NET CASH: | £33.4m | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 132 | 19.7 | 37.1 | 13.71 |
| 2017 | 119 | 15.9 | 29.8 | 13.97 |
| 2018 | 133 | 12.1 | 22.5 | 14.50 |
| 2019 | 150 | 14.1 | 25.2 | 14.78 |
| 2020 | 139 | 12.7 | 23.1 | 14.88 |
| % change | -8 | -10 | -8 | +1 |
| Ex-div: | 16 Jul | |||
| Payment: | 17 Aug | |||
