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(Alliance News) - Castings PLC on Wednesday reported a drop in annual profit and has warned the reduction in demand seen at the start of financial 2021 could continue through the rest of the year.
In the year ended March 31, the West Midlands-based iron caster's pretax profit dropped 9.9% to GBP12.7 million from GBP14.1 million.
"Despite the problems associated with Covid-19, I am pleased to report a reasonably satisfactory profit for the year," Chair Brian Cooke.
Revenue fell 7.7% to GBP138.7 million from GBP150.2 million.
Cooke continued: "It has been a year of three parts each of varying lengths. In the first half of the year we saw strong demand from our customers, generating a good level of profitability. The second half of the year saw reduced levels of demand from the commercial vehicle sector and output reduced to approximately 70% of our capacity; we expected reduced profit levels in this period as previously reported.
"The final part started in the third week of March 2020 as the impact of Covid-19 started to come through. As a result of plant closures at the OEMs, our demand reduced by approximately 80% and the year end result was negatively affected by approximately GBP750,000."
Castings declared a final dividend of 11.40 pence, giving it a total dividend of 14.88p, up slightly from the 14.78p distributed the year before.
"The group has always maintained a conservatively financed balance sheet, with prudent cash balances, so that we can weather the financial storms that arise from time to time. Our dividend policy has also been cautious with a view to the longer term," Cooke added.
Looking ahead, Castings said demand reduced "dramatically" in March and April, and it was forced to furlough a "significant proportion" of its staff.
Cooke added: "Despite this support from the government, the magnitude and sudden nature of the fall in output has inevitably had a significant negative impact on the results of the group at the start of the current financial year."
He continued: "It is pleasing to report that output has increased from the lows of April and a number of employees have returned from furlough leave as we plan for the higher demand set out in our customer forward schedules. However, production remains significantly below pre-Covid-19 levels and the continued uncertainty regarding the economic recovery post-lockdown means that it remains incredibly difficult to predict future demand and therefore whether this initial recovery in demand will be maintained through the year."
Shares in Castings were down 2.1% in London on Wednesday at 382.96 pence each.
By Paul McGowan; paulmcgowan@alliancenews.com
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