REG - Chamberlin PLC - AGM Statement and Trading Update

ChamberlinAnnouncement

30/11/2022 07:00

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RNS Number : 9921H  Chamberlin PLC  30 November 2022

30 November 2022

Chamberlin plc

("Chamberlin", the "Company" or the "Group")

 

AGM Statement and Trading Update

 

Chamberlin plc (AIM: CMH.L), the specialist castings and engineering group,
announces that at the Company's Annual General Meeting this morning, Kevin
Price, Chief Executive, will make the following statement regarding trading in
the first half of the financial year ("H1 2023").

 

"I am pleased to report that trading across all of Chamberlin's businesses is
in line with expectations in the first half of the financial year, as we
continue to implement our strategy and build on the improved operational and
financial performance achieved in the previous financial year. Despite orders
and operational performance at Russell Ductile Castings and Petrel remaining
buoyant, the Group's profitability in H1 2023 has been held back by a slower
recovery at Chamberlin & Hill Castings ("CHC"). We have continued to take
the necessary corrective actions in H1 2023 at CHC to improve its performance
through cost savings and margin enhancement initiatives, with this business
now entering H2 2023 at a broadly break-even position on a monthly basis.
These actions, together with the profit contributions expected from the
contract wins discussed below, give the Board confidence that CHC will deliver
a strong, profitable performance in H2 2023 and enable the Group to meet
market expectations for the year ending 31 May 2023.

 

Chamberlin & Hill Castings ("CHC")

 

Despite the uneven demand in automotive volumes in H1 2023 that has held back
its performance, CHC has been successful in its strategy of diversification
away from the automotive sector having secured a number of new orders in the
last two months with a potential aggregate annualised revenue value of
approximately £1.2m, in the construction, cast iron radiator and commercial
vehicle markets. Production is expected to commence on all of these programmes
by the end of the first quarter of the 2023 calendar year. A significant
proportion of these new orders are the result of the concerted efforts of
customers to source from local UK supply chains and CHC has the excess
capacity and technical expertise to be able to benefit further from this
trend.

 

In addition, CHC, through its Emba cookware brand, has entered into an
agreement with a well-established cookware company to develop, market and
sell, a jointly branded cookware range, through their substantial existing
network of distributors and retailers. The product range is currently in
development and is expected to be available for retail sale towards the end of
March 2023. This arrangement is a promising and exciting development for the
Group's Emba brand, providing access to a much wider customer base than could
have been established with the Group's in-house resources and supporting the
potential for Emba to become a more meaningful contributor to CHC's
diversification strategy.

 

CHC's machining facility has also won a number of recent new orders that will
see production ramp up over the next three months as these programmes gather
momentum. These orders are expected to have an aggregate annualised revenue
value of around £1.0m and will enable five out of the six machining cells to
be fully occupied on a single shift basis for the first time in nearly two
years by the end of March 2023.

 

These new contracts, in addition to a currently break-even trading position,
provide CHC with the opportunity to deliver a strong end to the current
financial year and ensure that it is well placed to make further progress in
FY 2024.

 

Russell Ductile Castings ("RDC")

 

RDC has continued to perform well in H1 2023 and the Board is pleased to
report that order intake and financial performance have continued to
demonstrate resilience and consistency. RDC's order book has remained stable
at around £4m throughout H1 2023 and remains on track to deliver to the
Board's expectations for this financial year. Notably in the first half, RDC
was successful in securing a significant contract in the renewable energy
sector, which is a target market for RDC's future growth strategy.

 

The positive outlook for RDC is now also supported by the completion of the
capacity expansion project in November 2022 that has increased RDC's ability
to produce large castings over three tons by around 30%, providing the means
to reduce customer lead-times and take advantage of its buoyant enquiry
pipeline from new and existing customers. This investment demonstrates the
Board's belief that RDC can continue to capitalise on its market leading
position in the UK for the manufacture of specialist and highly technical
large cast iron products.

 

Petrel

 

Petrel has made a positive contribution to the Group's results in H1 2023, at
a run rate consistent with the previous financial year and delivering
operating profit averaging around 17% of revenue. Order intake has remained
elevated, enabling the order book to be maintained at a consistently healthy
level. This includes a substantial order in the defence sector to supply
lighting to a branch of His Majesty's Armed Forces.

 

Petrel has a significant opportunity to release its untapped potential and to
increase its market share, having already earned a solid reputation with its
existing product range and in-house capability to develop its products further
and enter new markets. With this in mind, the Board has installed a new
management team at Petrel in the first half, with the industry knowledge,
vision and experience to exploit Petrel's true potential. As a result of this
change, there will be an exceptional restructuring charge of approximately
£0.1m in the income statement in the first half (unaudited). The Board
continues to strongly believe that the Group being in control of its own
destiny, through the ability to design, manufacture and market its own
products is an important part of the Group's future strategy and Petrel's
unique ability to be flexible and react quickly to customer needs means that
it is well placed to be a material contributor to Group performance going
forward.

 

Outlook

 

The green shoots of recovery that were evident from the Group's financial
performance in the previous financial year, have continued into H1 2023.
Although profitability will be second-half weighted due to the further efforts
required to improve the performance of CHC in H1 2023, these actions have had
the desired effect and give the Board the confidence that the Group will meet
full year market expectations for the year ending 31 May 2023 should current
market conditions remain unchanged. The Board, however, remains mindful of the
demand on working capital that the expected growth in revenue in the second
half from new orders at CHC and the capacity expansion at RDC will create, and
continues to evaluate opportunities to strengthen the balance sheet, including
in relation to the Group's property assets, in order to deliver on the Group's
growth objectives."

 

Certain of the information contained within this announcement is deemed by the
Company to constitute inside information as stipulated under the UK version of
the EU Market Abuse Regulation (2014/596) which is part of UK law by virtue of
the European Union (Withdrawal) Act 2018, as amended and supplemented from
time to time.

 

 

Enquiries:

 

 Chamberlin plc                                            T: 01922 707100

 Kevin Price, Chief Executive

 Alan Tomlinson, Finance Director

 Cenkos Securities plc (Nominated Adviser and Broker)      T: 020 7397 8900

 Katy Birkin

 Stephen Keys

 George Lawson

 Peterhouse Capital Limited (Joint Broker)                 T: 020 7469 0930

 Lucy Williams

 Duncan Vasey

 

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