Castings plc is a market leading iron casting and machining group based in the UK, supplying both the domestic and export markets. The company is listed on the LSE main market and has a market cap of £170m. Results for the HY to 30th September 2021 were released on 12th November.
We were delighted to welcome the CEO, Adam Vicary and FD, Steve Mant, to a webinar for private investors to talk about how they are performing in the current environment. A recording of the webinar is available here.
Castings is structured into three operating businesses. The original Castings business is based at the Brownhills foundry in the Midlands, produces 30k tonnes/year and employees 385 staff. The company’s machining business is based on the same site and was acquired in 1996. The machining facilities operates over 100 CNC (computer controlled) machines and employ 355 staff. The largest foundry, William Lee, located at Dronfield in the Peak District, produces 40k tonnes/year and employs 435 staff. All divisions have added staff over the past year. The group produces ductile iron, SG iron, austempered ductile iron (ADI), SiMo and Ni-resist castings up to 45kg in weight. There is foundry capacity of 70,000 tonnes per annum from a mix of high volume and specialist lines.
The first half of the 2021 financial year can be described as a tale of two quarters with the first quarter when business as usual was the norm and the second quarter impacted by supply issues affecting their customers. Q1 experience good demand, sales volumes recovered to pre-covid years, and the machine shop returned to profitability. Prices for their core input, scrap metal, rose and there is a lag recovering these cost increases. In the second quarter demand for trucks remained high but well publicised issues in the supply of semiconductors impacted production rates and hence Castings’ sales. It was not uncommon for their customers to shut production lines/plants for a number of weeks intermittently throughout this period. There were some positives with a number of new customers coming on stream and an increase in the parts with value added content and hence higher profitability for Castings.
The financial performance showed sales increasing to £69.7m, a rise of 67% to just below the September 2019 figures. Profits were £5.4m, the net margin recovered to 7.8% and the interim dividend rose 2.5% to 3.66p. Free cash…
