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(Sharecast News) - Castings and machining group Chamberlin said on Wednesday that underlying demand was below internal expectations during Q3, with lower than anticipated sales "negatively" affecting profitability and working capital.
Chamberlin said schedules over the period were lower than previously forecast by customers and were further impacted by delays with the startup of certain new programs. While the group noted that demand from customers in the renewable offshore energy market remained "very strong", the majority of other market sectors were affected by a slowdown in immediate demand.
"Lower sales during Q3 FY24 have negatively affected profitability and working capital, however, the management team are taking appropriate action to mitigate the impact now and going forward," said Chamberlin.
The AIM-listed group stated the slowdown started to improve during Q4, with customer schedules now recovering to "a more normalised and stable level", with a strong uptick in demand forecast within the next six-month period as new programs start to ramp up production.
"Following a full strategic review, a program of cost reduction actions have been implemented across the Group including labour reductions, short time working (as required) and senior management restructuring. Alongside this, the Company has conducted a full review of product margins and implemented price increases accordingly to underpin the required profitability and cash generation. The group is expected to benefit from these actions within three months and create a more robust level of profitability going forward," said Chamberlin.
Chamberlin added that its balance sheet debt had "greatly improved" following the sale of Petrel, with the company remaining focused on paying off the remainder of its legacy debt within the next 12-month period - excluding the remaining pension deficit and HSBC invoice finance facility.
As of 1025 BST, Chamberlin shares had sunk 22.42% to 1.28p.
Reporting by Iain Gilbert at Sharecast.com
