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Castings cranks up profits but warns gains may not be sustained as politics plays out

The company posted first-half profits before tax of £7.34mln, up 27% year-on-year on the back of improving sales

Foundry
Castings has already seen a reduction in schedules from the commercial vehicles sector, which represents 70% of group revenues

Castings PLC (LON:CGS) said that while its profits have risen strongly in the last six months, the foundry operator's full-year figures could “differ materially from expected and historical results” as political uncertainty continues to threaten industry.

In its half-year results, released on Friday, the company said that it was “still too early” to tell what impact the upcoming general election in the UK and continuing Brexit-related uncertainty might have on profits over the next six months.

READ: Castings enjoys benefits from manufacturers' stock-building

Castings has already seen a reduction in schedules from the commercial vehicles sector, which represents 70% of group revenues, as orders across the industry continue to decline in Europe.

Nevertheless, the metalworking group posted healthy sales of £73.1mln for the six months ended 30 September, up 7% from last year, with profit before tax cranking up 27% to £7.34mln.

The group said it saw strong customer demand in the first three months, followed by some softening in the second quarter notably from the commercial vehicles sector, which represents 70% of group revenues.

The boost came as a result of rising outputs and margin improvement in the foundry division, and a “continued shift to more machined parts” which have higher average selling prices, it added.

The company said its machining division’s profits sank 88% to just £100,000, which Castings said was due to an expected reduction in revenues as the company focuses on its core foundry business, where it has invested £3.1mln in productivity in the last six months.

Castings increased its interim dividend to 3.48p per share, up from 3.38p a year earlier, which will be paid on 2 January 2020.

In early trading, Castings shares were flat at 377p..

Quick facts: Castings PLC

Price: 382 GBX

LSE:CGS
Market: LSE
Market Cap: £166.67 m
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