Chamberlin PLC (AIM:CMH) said revenues in the first half of the new financial year have been in line with management's expectations,
The specialist castings and engineering group released results for the 14 months to the end of May 2021 that were hit by two major events: the Covid-19 pandemic and the cancellation of orders in the second half of the period by a major customer, BorgWarner (NYSE:BWA).
The group loss before tax for the period was £10.4mln, of which £6.5mln was related to charges arising from the loss of the BorgWarner contracts. The loss compared to a statutory loss of £.23mln in the 12 months to the end of March 2020 and an underlying loss for the same period of £1.43mln.
Revenue in the 14-month period was £26.4mln compared to £26.1mln in the 12 months to the end of March 2020, down 14% on a pro-rata basis.
Foundry revenues fell by 13% on a pro-rata basis to £23.3mln (£23.1mln) reflecting the slowdown in the economy, particularly the automotive sector, during the pandemic and the loss of the BorgWarner contracts at Chamberlin & Hill Castings partially offset by an 18% increase at Russell Ductile Castings.
Engineering revenues of £3.1mln decreased by 12% on a pro-rata basis (2020: £3.0mln), primarily due to COVID-19 induced customer shutdowns in the first half of the period.
Net debt at the end of May had been reduced to £1.8mln from £4.6mln 14 months earlier following the company’s £3.5m equity raise in March 2021.
The equity raised enabled the group to facilitate the necessary reduction in headcount to realign the cost base to the lower level of revenue in the wake of the BorgWarner decision and to provide sufficient working capital to stabilise the business.
“We trust these events are now behind us,” said Keith Butler-Wheelhouse, the company’s chairman.
The company’s chief executive officer, Kevin Price, said the company is now working through the recovery phase from these unprecedented events and implementing a strategy and platform to return the group to profitability. In the new financial year, resources have been directed towards new product lines to rapidly reduce reliance on the automotive industry.
Like most of the UK’s manufacturing industry, the company is experiencing supply chain constraints and transportation delays but it also said these present an opportunity, with companies reversing previous decisions to source products from overseas.
“Made in the UK is a significant unique selling point across all our businesses and the board believe we are well-positioned to take advantage of the opportunities this will inevitably present,” Price said.