Chamberlin PLC (AIM:CMH) said it expected to report the first full-year profit in five years and that all three operating divisions have made a strong start to the new year.
The castings and foundry group said it expected to report adjusted EBITDA 112% higher in the year to 31 May 2022 compared to the previous 14-month period.
It said this followed a “significant improvement” in operational performance, with record revenues and operating profit growth at the Petrel lighting and Russell Ductile Castings arms as demand bounced back after the pandemic lull.
Recovery at Chamberlin & Hill Castings in Walsall has been slower than anticipated, and it continues to operate at a loss.
The deficit in shareholders' funds is expected to largely be eliminated, Chamberlin said, as a result of the restructuring actions, a reduction in the pension deficit and the improved operational performance.
In the first weeks of the new 2023 financial year, higher-than-expected levels of orders have been received and with “strong” ongoing order books for all three business.
“The group is well positioned to continue its recovery and expects to return to a more sustainable level of profitability, having taken the appropriate steps to reduce its cost base and invest in new growth strategies for each business.”
It said the recovery was supported by the group's protection from any current or medium term energy price increases, having in 2020 secured a five-year fixed price contract for electricity, which it said placed it “in an increasingly competitive position to win new orders”.
As Chamberlin & Hill Castings works to reduce its reliance on the automotive industry, management continued to reduce costs, improve efficiencies and optimise pricing, though it operated at a loss during the year. The division is expected to see demand for automotive products improve in the new financial year, with contracts won in the supercar market and commercial vehicle sector.
Diversification has seen its Emba cast iron cookware range “very well received” by customers, with a “rapid increase in sales, new leads and social media followers” in the final quarter, such that management expects it to be a “material contributor to growth over the coming months and years”, while the Iron Foundry Weights (IFW) brand launched in May last year remains focused on selling bespoke products direct to consumers, with new ranges to be launched in the new financial year.
Russell Ductile Castings, the Scunthorpe foundry operation, is expected to grow operating profits more than 300% compared to the prior 14-month period as it operates at near full production levels, in response to both a growing customer demand and pipeline of opportunities, with the current order book also expected to enable internal forecasts to be met for the first half of 2023.
Petrel, the specialist lighting business, is expected to report at least a 150% increase in operating profitability.