Restructuring and Covid costs behind losses at Chamberlin
By Josh White
Date: Tuesday 29 Sep 2020
(Sharecast News) - Castings and engineering company Chamberlin said on Tuesday that sales for the year ended 31 March were expected to be £26.1m, down from £33m year-on-year.
The AIM-traded firm said that was expected to result in a loss before tax of £2.3m, narrowing from £5m in the 2019 financial year.
It said non-underlying costs of £0.9m contributed to the loss, which were primarily restructuring costs.
Net debt at year-end on 31 March was expected to be £4.6m, down from £5.4m in the prior year.
Sales for the six months ending 30 September were expected to be £11m, down from £12.8m, which was expected to result in a loss before tax of £0.6m, narrowing from £1.8m.
Non-underlying costs, mainly restructuring, of £0.2m, contributed to the loss, which was down from £0.7m in the prior year, as well as the impact of the Covid-19 pandemic in April.
Operationally, Chamberlins said most employees were now working "normally", with only a small number remaining on furlough.
Production levels at its Walsall factory were now said to be "broadly in line" with activity seen immediately prior to the impact from Covid-19, with output levels at its machine shop now also returning to pre-pandemic levels.
Russell Ductile, the company's Scunthorpe foundry operation, which remained open throughout the Covid-19 lockdown, reportedly continued to operate at or near full production levels in response to growing customer demand.
Petrel, Chamberlin's specialist lighting business, was operating at around 60% of normal sales volumes.
"Despite current levels of activity in the Walsall foundry being relatively high, the outlook for a number of the key markets, particularly across the automotive sector, remains uncertain and the board continues to believe that it is still too early to make any reasonable estimate of the financial impact on the group during the current year and beyond," the board said in its statement.
"As previously reported, the board has taken significant steps to reduce costs in line with the expected reduction in demand."
At 0802 BST, shares in Chamberlin were up 7.69% at 14p.
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