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(Alliance News) - Iron castings and machining firm Castings PLC boosted its interim dividend Friday after profit and revenue grew on strong demand for its core foundry products during the period.
For the six months ended September, pretax profit widened 26% to GBP7.3 million from GBP5.8 million the year prior. This was after revenue rose 7.0% to GBP73.1 million from GBP68.3 million the year before.
With regards its core Foundry business, "customer demand was strong during the first three months of the period followed by some softening in the second quarter."
All told, Foundry revenue rose 7.9% to GBP70.1 million after output increased 5.4% to 25,200 tonnes.
"The revenue figure is enhanced by the continued shift to more machined parts which results in higher average selling prices", Castings added in a statement.
In its much smaller Machining unit, revenue fell 8.1% to GBP3.0 million.
"The focus on engineering and productivity improvements in the machining business are now starting to be realised and have resulted in a return to profit in the period," Castings added. "It will continue to take time before all of the necessary processes have been reviewed and production efficiencies fully reflected in the operating performance. Where gains have been made this has increased the capacity available for future production without the need for further investment."
Casting proposed a 3.48 pence per share interim dividend, up 3.0% from 3.38p the year prior.
"The commercial vehicle sector has reported a decline in order intake in Europe," Casting said. "Accordingly, we have seen a reduction in schedules from this element of our customer base, which represents 70% of group revenue."
"The focus in the foundry businesses continues to be on productivity improvements within the production processes and the completion of the automation of finishing processes," Castings added. "We expect to see the benefit of this during the remainder of the current financial year and into 2020/21."
"The programme of automation investment commenced in the machining business following the successful development of a pilot cell during the period," Castings continued. "This will enable the business to achieve additional productivity gains over a number of years."
Shares in Castings were 3.9% higher at 391.60 pence in London on Friday.
By Ahren Lester; ahrenlester@alliancenews.com
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