The <link _top external-link-new-window>foundry and machining group <link _top external-link-new-window>Castings plc reported today that it had been hit by a double whammy of the downturn in the automotive sector and the demise of Icelandic banks and would be cutting staff and delaying the start-up of a new foundry at its South Yorkshire subsidiary Wm. Lee.
Announcing the company’s half year financial results, chairman Brian Cooke said pre-tax profit for the period ended 30 September was £6.22 million compared with £6.27 million in the same period last year. However, operating margins had reduced as a result of a shortfall in the recovery of rapid raw material price increases during April through to July.
He also reported that the company’s £5.7 million deposits in three Icelandic banks were under threat but added that their loss would not have any impact on the ability of the group to finance its trading operations or its capital expenditure programme.
The 'crazy situation' of world financial problems was well documented and the resultant effects on all manufacturing companies, particularly those related to the car and truck industries, were becoming clear, Cooke said.
Up to the end of September the group’s companies – Castings and CNC Speedwell in the West Midlands and Wm Lee – were operating well, but since the beginning of October there had been a substantial reduction in customers' schedules, now up to 40%, in the commercial vehicle manufacturers and at a higher level in the car industry.
“As a result of these reductions and the uncertainty in the immediate future we have had to reduce the number of shifts worked and regrettably we have had no option but to reduce the numbers employed,” Cooke added. The group currently employs around 900 staff across its three operations.
He also warned on profits, saying that full year results would be below expectations.
The new foundry at William Lee will be ready for production in the new year, but the opening will be delayed “until we see an improvement”.
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